Wow. Every accountant and business owner’s favorite topic-spending less. Accountants and business owners, in my experience, hate to spend money without a tangible return. Neither group enjoys hearing how much was “saved” during a personal or work-related transaction.
Are companies different? Yes-but there are similarities too. While in a relationship you may have one person making lots of purchases that the other person would not make, in a business (without a Requisitions module) you can have lots of people spending money without any set guidelines. On the other hand, a personal relationship does not typically have “permission” issues-especially in dual income families.
It’s still easier to ask for forgiveness than permission. We’ve all experienced that from both sides. Perhaps that is why an accounting department needs to put in place a good requisitions business process, complete with approvals.
It’s surprising to me how so few people use a purchasing module or a requisitions module in order to ensure that spending has been appropriately authorized. With Microsoft Dynamics SL and Dynamics GP, the modules are often included in the price of the software, or worse case-scenario,-available for a nominal fee.
For a business of 10 people-I get it. It’s more hassle to put these processes in place and everyone works closely with the owner typically so no one is going “too crazy”.
For larger businesses say 25 people and up, a requisitions system is a key component to improving the bottom line. Company credit cards make spending easy as do fast deadlines, client demands, a lack of resources, and a host of other valid and sometimes not-so-valid reasons.
A good requisitions system allows you to do the following:
- Consolidate approved requests to one purchase order for improving vendor pricing since bigger orders can get better discounts.
- Maintain a history of past requests by user, by date or by department.
- Eliminate duplicate entry between a request, a purchase order, and a vendor’s invoice.
- Provide a flexible approval structure so that if I am on demand, I can ask Carol to approve requests while I am gone.
- Improve accuracy from the point of the request. Who understands better than the person that wants to buy something, what they want to buy?
So if you’ve noticed “too much buying”, in the words of Ebenezer Scrooge, put into place a process with software to help eliminate some of these serendipitous buys.