Purchase and Sales Cycle

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Purchases Cycle

Figure 1-1 Purchases Cycle
Purchasing Review
Purchasing is a process of buying goods and services. It was done by every department of Hup Seng Industries Berhad, when they have the needs, wants, and demands to authorise certain goods and services. The purchases cycle starts with purchase requisition request by various departments. The purchase requisition was sent to the purchasing department. After the related suppliers were reviewed and examined by the purchasing agents, purchase requisition will be approved and approved supplier quotation will be issued. Purchase order will also be issued and copies will be sent to several related parties. Before the goods are received by Logistic & Warehousing department, the purchase order will be monitored and followed up. The goods will be examine and inspected by the Quality Management department as soon as they are received. Goods received notes will be received right after the examination and inspection were done and it will be given to the Accounts department in order to make a stock recording into relevant accounts for future usage.

Documents Involved
Purchase Requisition
Purchase requisitions were issued by various departments when the departments need certain goods and services. It contain information such as description of items, quantity, price range, payment terms, required delivery date, names and address of suggested suppliers, and other relevant information. Purchase requisitions are often used as a proposal to the purchasing department in order to decide whether the purchase is necessary and worthy. Approved Supplier Quotation

Approved supplier quotation will be issued by the approved suppliers to the company when the purchasing department inquires them. The content of the quotation includes description of items, exact price, payment terms, delivery date, name and address of the suppliers and other information. These quotations are used as company’s reference for them to decide which supplier to choose. Purchase Order

Purchase order is a written sales contract between the company and the supplier. Details of the exact merchandising and services to be rendered are stated in the purchase order. Similar to the purchase requisition and approved supplier quotation, it includes the specified price, payment terms, quantity, delivery dates, item description, shipping terms, and other obligations, conditions and relevant information. It will be issued in 5 copies and sent to several departments and parties, which are, suppliers, Purchasing department, Logistic & Warehousing department, Quality Management department, and Accounts department. Receiving Reports

Receiving report is a document that records the receipts of goods. It is a copy of purchase order which excludes the statement of quantity. Adequate and independent count will be done by the staffs of the Logistic & Warehousing department. Besides the amount of goods received, descriptions, dates and other information and data will be recorded so that comparisons with the purchase order can be done easily. This document is relatively important because the receiving of goods will leads to recognition of the liability of the company. Goods Received Notes

Goods received notes will be received after goods had received and examined. The Quality Management department will inspect on the quality and quantity of the goods received. It will be issued after the Quality Management department had verified that the quantity and quality are the same as the purchase order. Supplier Invoice

Supplier invoice is also known as the bill sent by the supplier. It indicates the description and quantity of the goods shipped, services provided, amount charged, terms of trade, cash discounts and date billed. Cheque

Cheque is one of the ways to pay for the goods and services received and clear the debt. It was signed and authorised by the Purchasing or Finance department of the company....
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