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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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3–46. Create Direct Purchase Interfaces to Suppliers

A common practice when purchasing is to issue a separate purchase order to a supplier whenever a company wants to buy additional items. One solution to this problem is to consolidate all the purchase orders into a single large one that covers a long time period, which is called a blanket purchase order. This best practice is described later in this chapter in the “Use Blanket Purchase Orders” section. Though an excellent approach, it is sometimes possible to eliminate the purchase order entirely by using a direct purchase interface to a supplier.

This best practice involves creating a computer or fax linkage to a supplier, so that employees can order supplies directly from the supplier. By doing so, the purchasing staff does not have to become involved in any purchases and the accounts payable staff does not have to match any purchase orders to supplier invoices, thereby saving time in two departments. Though a clear efficiency improvement, this approach must be used with care because it eliminates some control over purchases. Accordingly, it is usually only used for the purchase of small-dollar items that are bought on a repetitive basis. Good examples of suppliers that might be used for this approach are office or maintenance supply vendors. In these cases, a company can create a standard form that only includes certain products. Employees are allowed to fill out the form with any quantity they want (within reason) and fax ...

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