Operations & Systems
Money leaves the business through purchases. Who decides, and who checks?
In many small businesses the owner approves everything, or nobody does. Orders are placed by phone, goods are received without being checked and bills are paid when they are noticed. Controls need not be heavy. A few simple rules about who orders, who receives and who pays catch most honest mistakes and make dishonest ones harder.
Explore this page6 sections
Most purchasing losses come from gaps in routine, not from villains.
Duplicate orders, goods billed but never delivered, prices that drift above what was agreed and items bought that nobody needed are usually the result of loose process. A small number of controls reduces all of them, and also protects the staff who do the buying from suspicion.
In a very small business, one person may have to do several steps. The session shows how to compensate: for example, by the owner reviewing a short monthly report instead of approving each item. The aim is proportionate control: more where the risk is high, almost none where it is not.
What the session covers
31 topics across 6 areas. Six controls, from the request to the payment.
Who Can Buy WhatDecide it before it is needed.5
- A short list of people who may place orders
- Spending limits by role
- Purchases that always need the owner
- Approved vendors for regular items
- Emergency purchases and how they are recorded afterwards
Requesting and ApprovingA written request, even a simple one.5
- What is needed, how much and by when
- Who approves and how it is recorded
- Checking the need against existing stock
- Comparing prices for larger purchases
- Keeping approvals on a message, form or register
An approval that exists only in a conversation cannot be checked later.
Purchase OrdersSay exactly what you have agreed.5
- Item, quantity, price, delivery date and terms
- A simple numbered order, on paper or in a spreadsheet
- Sending it to the vendor in writing
- Changes to an order in writing
- Keeping a copy with the request
Receiving GoodsThe moment to catch errors.5
Illustration (hypothetical): a clinic's receptionist places an order and the same person signs for the delivery and enters the invoice. A second person now checks the delivered quantity against the order, which takes two minutes and removes the easiest source of error.
- Checking quantity and condition against the order
- Signing for what was actually received
- Noting shortages and damage the same day
- A separate person receiving, where possible
- Entering received items into stock
Matching and PayingThree documents should agree.6
- Order, delivery record and invoice
- Investigating differences before paying
- Checking rates, quantities and taxes on the invoice
- Paying through traceable methods and on agreed dates
- Avoiding payments on photocopies or unsupported claims
- Following up credit notes and returns
Reviewing and Keeping RecordsA short regular review is the real control.5
- A monthly list of purchases by vendor and item
- Spotting prices that rise, unusual items and split orders
- Rotating who handles which vendors where possible
- Records kept as long as accounts and tax rules require
- What to do when something does not add up
How long records must be kept depends on the law that applies. Check the current rules with your accountant.
What participants leave with
- A one-page buying process for their business
- A purchase request and order template
- A goods-received checklist
- A three-way matching checklist for invoices
- A monthly purchase review sheet
What this session is not
- An audit, forensic or fraud investigation service
- Legal, tax or accounting advice
- A suggestion that staff are not to be trusted
- A guide to government tenders or public procurement rules
How the session runs
Participants draw their current buying process from request to payment, mark the steps where one person does everything and where nothing is written, and add one or two controls that fit their size. A hypothetical purchase with deliberate discrepancies in the paperwork gives them practice in the matching step. The close is a plan to try the new routine for a month.
What your students leave with
- A simple buying process from request to payment, written on one page
- Clear limits on who may order what, and who approves larger purchases
- A habit of matching the order, the delivery and the invoice before paying
- A way to separate ordering, receiving and paying where the business can
- A purchase register or file that shows what was bought and why
- A list of warning signs that a purchasing problem may be developing
Scheduled sessions
Nothing scheduled yet
Sessions are arranged with a college once a date is agreed. Ask us and we will find the right person for it.
A student rather than a college? See what is coming up, or ask your placement team to host this.
Match what you ordered, what arrived and what you were billed, before you pay.
Tell us who your students are and what stage they are at. Sessions are free for participants.