PURCHASE ORDER PROCESS Instruction: In a yellow paper, write down the following: a. Process b. Risks c. Impact d. Likelihood e. Overall assessment f. Internal control A purchase order describes in detail what you'd like to buy. It will show: a. Date b. Names of both the requesting party and the vendor and contact information for both parties c. Types of requested products/services d. Prices of requested products/services e. Quantities of requested products/services f. Payment information g. PO number (used when referencing the invoice and all attaching documents) A purchase order is not a legally binding contract. It's simply describing in detail to the vendor what you'd like to buy. The typical purchase order workflow includes these actions: 1. PO creation - Someone in your company has requested the goods/services, and that purchase request must be approved. Once the request has been approved, the purchase order can be created. 2. PO approval - The quantity, type, and price of goods/services must be approved before continuing the process. 3. PO dispatch - After the PO has been approved, it can be given to the vendor for fulfillment. 4. Creation of a binding contract - This contract protects the vendor from organizations who don't pay for goods or services. Once a vendor receives the PO, they will draw up a contract to be signed by the vendor and the buyer. 5. Delivery of goods - After the contract has been signed, the vendor will deliver the goods or fulfill the services. Now, your organization has the chance to look over the goods/services for defects or anything missing from the packing slip/receiving report. 6. Three-way matching - During this step, you'll check that the vendor invoice, the PO, and the receiving document/receiving report/packing slip all agree with one another. This step protects you from overpaying for items and ensures that the items received are the items ordered.