How to Set Up a Purchase Order System for a Small BusinessIn Feburary 2016 27,

In Feburary 2016 27,
Examine why you want to institute a purchase order system. You might be having problems with vendors shipping the wrong materials and supplies or not delivering them on time. You might have suppliers who won’t ship you items without pre-payment if they don’t have a written purchase document. Or you simply might want to prevent fraud or errors.
Choose Who Will Be Invovled
Decide who needs to be involved in setting up your purchase order system. Start with your accountant or bookkeeper, if you have one. Review your bank and credit card statements to see who makes the most purchases during a month. Depending on the size of your business, include management and staff members who will have to use the new system. If you won't be doing the work yourself, put one person in charge of the project and give him the authority to designate project tasks to other staff members. You might consider creating a small committee to handle the task.
Include one or two vendors or suppliers who will be asked to accept your purchase orders.
Set Policies
Spell out the circumstance under which employees can make purchases and who can make purchases.
This will limit who can use and transmit a purchase order. Consider creating a list of approved vendors who will accept your purchase orders so you can increase your ability to control costs and quality. This eliminates the problem of having to pass frequent vendor credit checks when making purchases.
Develop Your Forms
Purchase orders are the forms that become the center of your purchase order system. Create forms employees can use that allow you, a bookkeeper or accounting department to easily input purchase orders into a financial document for later reference. The form should include items such as the following:
name of your company, address and contact information
department requesting the purchase
person who approved it
item being purchased
item cost per unit
number of units ordered
total cost without tax
tax amount
total amount with tax
the vendor
purchase order number
date requested
date of delivery
Your form should allow you to run reports by vendor, department or item to quickly find out how much the company is spending in certain areas. Each document should have a purchase order number for easy reference when you contact a vendor or supplier or vice versa.
Solicit Input
Once you’ve created the first draft of your new purchase order, ask the people who must use it for their feedback. Explain why you are instituting the system and
provide examples of how accounting will use the system. Ask your vendors and suppliers what they think of your form, and if they have any additions they’d like you to make.
Communicate The New System
After you have used the recommendations and feedback you've received to create your final purchase order and procedures for using it, communicate the information to everyone who will be involved. Put the information in writing and send a copy to each staff member. Have them sign a document stating that they’ve received, read and understand the document.
In Feburary 2016 27,