Buying · 6 min read
Purchase order to payment: a buying process that survives growth
Buying is the part of a growing business that stays informal longest. One person knows the suppliers, knows the rates, and keeps it in their head or their phone. It works beautifully until that person takes leave.
The process below is not corporate bureaucracy. It is the minimum structure that stops you paying twice for goods you received once.
Keep supplier rates somewhere other than memory
The first thing to write down is what each supplier charges for each product. A vendor pricelist means your buyer orders at the rate you negotiated instead of copying an old order and hoping.
It also makes a price increase visible. When a supplier's new list arrives and you replace the old one, the change is a deliberate act you can see, not something you discover in a bill three weeks later.
Say what you ordered before it arrives
A purchase order is simply a written statement of what you asked for, at what price, from whom. Confirm it and the warehouse knows what to expect, the buyer knows what is outstanding, and whoever pays knows what is coming.
Without one, the delivery arrives and the only reference is the supplier's own paperwork-which is, understandably, written from the supplier's point of view.
Receiving is a separate fact from ordering
This is where most informal processes break. You ordered 100. 80 arrived. If receiving is not recorded separately, your system believes 100 arrived and your stock is wrong from that moment onward.
Record a goods receipt for what physically landed, into the specific location it landed in. Partial deliveries then stay visibly outstanding instead of quietly closing.
- What was ordered - the purchase order
- What actually arrived - the goods receipt
- What the supplier is charging - the vendor bill
- What you have actually handed over - the payment
Bill and payment are the last two facts
The supplier's bill should be checked against what you received, not against what you ordered. That is the entire reason for keeping the two separate.
Recording payments against the bill then gives you the number every owner wants on demand: what do we still owe, and to whom. That should be a screen, not a phone call to the person who knows.
Separate the buyer from the payer
Once the business is beyond a handful of staff, the person who orders goods and the person who releases money should ideally not be the same person, and neither necessarily needs to see everything.
Permission-based access makes this practical rather than political: a shop manager can see what is arriving without seeing cost prices or supplier balances, and a buyer can order without touching payments.