Procedure that could help strengthen your Procurement to Pay System

In order to strengthen an existing procurement to pay system of an entity, here is my suggested procedure that could help our fellow steemians who have concerns involving this matter:

Step 1
Make sure that all or the request for supply of goods or service of a certain department has been assessed and approved by the Department Head.

Step 2
After evaluation of the received request, Purchasing Department should be the allowed section of the company who will look for a supplier, take quotations to compare the pricing and lastly , check the quality if it fits the need of the company.
Never ,ever compromise the quality of a certain product.

In this section also, Purchase Order should be made and approved. As much as possible, it would be better to have an integrated accounting system and Purchase Order will not be printed once it has not been approved.

Step 3
Stocks delivered by the supplier , should be centrally received by the assigned property custodian in order to check the quantity and quality of the items delivered against the approved Purchase Order.

Aside from receiving the stocks manually, it shall also be received in the system in order to close the outstanding Purchase Order.

Step 4
Sales Invoice or Charge Sales Invoice or Delivery Receipt will be forwarded to Accounting Department for Accounts Payable Recognition.

A/P Officer will check the Invoice and compare against the Purchase Order in order to double check the price per item, accuracy of received item quantity and all other information. This process is commonly known as the Three (3)-Way Matching. Wherein, A/P Officer will compare the Invoice vs Goods Receive vs Purchase Order.

If everything has been checked and no issue or error has been encountered, posting of Liability is now allowed.

Step 5
Accounting Head will check all the computations including possible withholding taxes,value added tax, expense and liability. He/She will also double check the validity of the supporting document and the accuracy of expense or inventory account used.

Step 6
After the Accounting Head approves the recognized A/P Voucher, Audit Department can conduct post audit on recognized liabilities.

Step 7
Only audited A/P Vouchers can now be processed for check issuance and payment application in the Accounting System.

Step 8
Budget allocation should be made before check processing c/o Treasury Department.

Step 9
Check issued should be checked by the Accounting Head and Audit Department.

Step 10
Once Payment /Check Voucher has been audited. A/P Officer may now proceed to check signatories for final approval.

Step 11
Check issued together with its supporting document may now be forwarded to the Releasing Officer and now ready for schedule for releasing to suppliers.

Suppliers should issue Collection Receipt or Official Receipt or Acknowledgment Receipt or Provisional Receipt for the received payment.

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I hope this could help specially to those who are just starting up their business and wants to gather ideas . This is not perfect but hopefully could shed some light and can be made better depending upon the type of business and culture that you want to exercise within the work environment.

Thank you very much.

chunyang123