Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Marcia Wilkinson
Reviewed date: 2025-09-13
Next review date: 2026-09-14
This Standard Operating Procedure (SOP) for Payables - Purchase Order is designed to ensure consistency and accuracy in the procurement process. By following this procedure, the personnel involved will adhere to established guidelines for gathering necessary information, verifying details such as pricing and quantities, obtaining required approvals, and submitting orders promptly to suppliers. This ensures proper financial control, budget adherence, and vendor accountability.
This SOP applies to a member of the accounting team who prepares 'Purchase Orders' for goods and services. A purchase order is prepared, whenever possible, prior to making a purchase. All purchases should be made from approved vendors, with at least two vendor quotes obtained where applicable. Purchase orders must align with budgetary constraints and company financial policies. Any deviation from standard procurement procedures must be documented and approved by management.
Financial Control Policy
Accounting Team Member: Responsible for gathering information, preparing, entering, and submitting purchase orders, and initiating the approval process.
Management Team: Responsible for reviewing, approving, or requesting adjustments to purchase orders.
Vendor: Provides quotes/estimates and fulfills the order upon receipt of the approved purchase order.
5.1.1 Identify the specific item(s) or service(s) needed.
5.1.2 Decide on a vendor. Ideally, obtain quotes or estimates from at least two vendors for comparison purposes, if applicable and feasible.
5.1.3 Request a formal quote or estimate from the selected vendor(s) for the required item(s) or service(s).
5.1.4 Special Case (Cedric L. Parker): Purchase Orders for Cedric L. Parker are prepared using the data from the Bad Debt Report.
5.2.1 Review the estimate(s)/quote(s) received and make a final decision on the vendor for the purchase of the item(s) or service(s).
5.2.2 Prepare a Purchase Order within the Accounting Software (Xero):
Log into Xero.
Select the '+' icon (Add New) and choose 'Purchase Order'.
Enter all necessary details into the Purchase Order form, including vendor information, item descriptions, quantities, unit prices, and total amount.
Ensure all fields are accurately completed.
5.2.3 Attach a copy of the selected quote/estimate to the purchase order entry in Xero.
5.2.4 Save and submit the Purchase Order for approval within the Accounting Software.
5.3.1 Once the Purchase Order has been entered and saved in Xero, notify the Management Team that it is ready for review.
5.3.2 The Management Team will review the purchase order. They will either approve it directly or request adjustments.
5.3.3 If adjustments are requested, implement them and resubmit for management approval.
5.3.4 Special Case (Cedric L. Parker): Email Cedric L. Parker's Purchase Order to them and request a corresponding bill for the same.
5.4.1 Once management approval is secured (indicated by the status in Xero), finalize the purchase order.
5.4.2 Send the approved purchase order to the chosen vendor via the agreed-upon method (e.g., email, vendor portal).
5.4.3 Confirm order receipt with the vendor and request an estimated delivery timeline for the goods or services.
5.4.4 Maintain a record of the submitted purchase order (e.g., printed copy, digital file, or confirmed status in Xero) for future reconciliation and audit purposes.
5.5.1 Monitor the order status to ensure timely delivery of goods or services. Follow up with the vendor as needed if there are delays.
5.5.2 Upon receipt of goods or services, verify them against the original purchase order and the vendor's invoice.
5.5.3 Report any discrepancies (e.g., quantity, quality, pricing) to management immediately and coordinate resolution with the vendor.
5.5.4 Ensure that invoices received from vendors are accurately matched to the corresponding purchase order before processing for payment.
Purchase Order (generated from Xero)
Vendor Quotes/Estimates
Proof of Management Approval (within Xero or separate communication)
Vendor Invoices
Delivery Notes/Receipts of Goods/Services
Bad Debt Report (for Cedric L. Parker POs)
All Accounting Team members involved in the preparation and processing of Purchase Orders will receive mandatory training on this SOP and related policies annually or upon significant revisions.
This SOP will be reviewed annually by the Accounting and Finance Departments to ensure its continued effectiveness, compliance with financial policies, and alignment with business objectives.