Why your small business needs a formal purchasing process
Written by Toby Knott
It can be easy as a small business owner to skip over the formalities of your purchasing process. Maybe you’re just dealing with it all yourself because the paperwork seems like an unnecessary hassle. You’ve already got a good relationship with your vendors, so why bother with formalities?
But being blasé about it will cost you time and money, particularly as the frequency and complexity of your purchases grows along with your business.
Taking control of your purchasing will help you keep track of your purchase history, prevent duplicated or erroneous orders, foil fraud and save money.
What’s more, formalising the process will allow you to build up a picture of your purchasing trends and vendor behaviour. This gives you the edge when it comes to planning, negotiating and budgeting.
So how do you formalise your purchasing process while keeping it streamlined?
3 tips for formalising your purchasing process
Have a dedicated manager. As a small business, you don’t need an entire department, but you should have one person acting as purchasing manager. They will review and approve all purchases to prevent duplication and internal fraud.
Use standardised purchase orders. They have numerous business benefits, such as providing an accurate audit trail for a point of reference if the seller slips up or something else goes wrong with the order.
Move your purchasing online. Apps like Turbine allow your employees to raise purchase orders on the fly, while giving you the control to manage all your purchasing from one central dashboard, rather than having to rifle through different spreadsheets and piles of paper.
Words like “process” and “policy” can set the bureaucratic alarm bells ringing. But adding a little formality to your purchasing makes for a more consistent and efficient business.