How to Manage Purchase

 

Purchase management is very necessary if you want to earn profit from business and grow your business. Purchase of raw material for manufacturing company or purchase of finished products for retail or whole-seller is major part of its total assets. So, if you do not know the management of your purchase, you will either purchase less your material or buy more than need and block your working capital which can use for other important works. So, as your accounting teacher, I teaching you the steps of purchase management step by step. With this, you can get success in your business. 

1st Step : Manage Your Material Requirement 

First of all, you have to find the detail of which material you require for purchase. It is common, only that material, we require whose sale has boosted. We sold all these items. If you are manufacturing company, you need that material's which helps same top sold product. Second if you are retailer or whole-seller, you need same product in your stock. 

Now, how will, you identify. Simple knowledge of cost accounting. It will teach you that you have to records all the quantity which you buy and sold or used in production and if there's is no closing stock, it is no good time, we keep production or sale smooth. So, we have kept reserved stock. At this level, purchase order is done. Purchase department says, we need these materials or products.

2nd Step : Manage Your Suppliers

Without regular accounting of each transaction, you can not find the details of your all suppliers. Without suppliers list, we have to find new suppliers and there is waste of time and it is possible that some time in emergency, we got costly material from new supplier. Now, every time to record purchase, we have to record the data base of suppliers in our computer.

3rd Step: Manage Your Supply

When seller send the delivery, he will send the challan of transport or courier receipt. Accountant has to verify physical that material is as per order and supply is both good in quantity, quality and mention price in invoice.

4th Step Manage Your Payment

Accountant will verify purchase order and invoice and due date of payment and will pay to suppliers

Never delay supplier's payment

5th Step Manage the Fund of Purchase

Cash does not come within one day when we need purchase. Company has to keep seperate the purchase fund from value of sale and when purchase order done. Withdraw this purchase fund and use it for purchase. If you don't manage better purchase fund. You can fail your business because lose of sale due to lack of material in stock is kill own blood line

Easy all these management depends on your knowledge.  Remember

So,

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