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#177585 - 05/08/08 12:45 AM Purchase Orders  
Sixer  Offline
Member
Joined: Aug 2005
Posts: 265
Canada
I've been dealing with the same supplier for years and as my business grows, so does the amount of materials purchased. I'm getting overwhelmed dealing with their invoices. Just by coincidence today I found a mistake on an invoice for some wire that was back ordered - they ended up charging me twice for it - the roll was just under $250.

What my supplier does is mark everything down on a sheet of paper, and we sign that we picked it up. It's not until later (sometimes weeks later) that they actually key it into their system and that's when it's emailed to me. My employees tag the invoices with a customer name or stock, but a lot of times my supplier doesn't bother entering the name. Their system seems primative for a company of their size, but I don't imagine they intend to upgrade it any time soon.

The issue here is that I feel like I'm losing control on the materials I purchase. I'm considering going to a Purchase Order system, but I'm a bit unsure on how it works, or how it can save me a bunch of headaches. My goal is to simplify things as much as possible so the paperwork isn't so overwhelming, yet still be able to track the purchases better.

I'm curious to see how many of you use PO's or some sort of other system to track your purchases, and how well does it work. I have a 4 man shop. Any input is appreciated.

Last edited by Sixer; 05/08/08 12:56 AM.

Sixer

"Will it be cheaper if I drill the holes for you?"

Business, Office, Estimating, Legal:

#177586 - 05/08/08 03:05 AM Re: Purchase Orders [Re: Sixer]  
Trumpy  Offline


Member
Joined: Jul 2002
Posts: 8,211
SI,New Zealand
Originally Posted by Sixer


What my supplier does is mark everything down on a sheet of paper, and we sign that we picked it up. It's not until later (sometimes weeks later) that they actually key it into their system and that's when it's emailed to me. My employees tag the invoices with a customer name or stock, but a lot of times my supplier doesn't bother entering the name. Their system seems primitive for a company of their size, but I don't imagine they intend to upgrade it any time soon.

The issue here is that I feel like I'm losing control on the materials I purchase. I'm considering going to a Purchase Order system, but I'm a bit unsure on how it works, or how it can save me a bunch of headaches. My goal is to simplify things as much as possible so the paperwork isn't so overwhelming, yet still be able to track the purchases better.



Randy,
That system that your supplier uses, sounds pretty shonky.
Over here, they print you off an itemised receipt to show you what you have been supplied with, what it costs, the quantity (where this is relevant) and you're on your way.
Oddly enough, it also alters their stock levels, automatically when stuff leaves the warehouse.
Has this supply house heard of computers??

Job numbers, rather than the person's name are more common here.

Just my thoughts.


Let's face it, these days if you're not young, you're old - Red Green grin

#177595 - 05/08/08 08:56 AM Re: Purchase Orders [Re: Trumpy]  
ghost307  Offline
Member
Joined: May 2005
Posts: 902
Chicago Illinois USA
So they sell you a $150 item...wait a while...then send you a bill for the $250 that it cost THEM to re-stock??

It sounds like they've perfected the art of "buy low...sell high"; but it's only working to THEIR benefit.

In all fairness, they might not be plotting evil things against anyone, but you should think about shopping around to see if you can get a more 'conventional' approach at another house. Maybe just that fact that you're concerned enough to look elsewhere will prompt them to take a closer look at their billing practices.


Ghost307

#177604 - 05/08/08 10:45 AM Re: Purchase Orders [Re: ghost307]  
gfretwell  Offline


Member
Joined: Jul 2004
Posts: 9,078
Estero,Fl,usa
I can't imagine any business that moves a lot of material not having a computer inventory system. I think the better tax accounting and control of "shrinkage" would pay for it fairly quickly. These days even the bulk packaged items seem to have a UPC bar code sticker so you could track items as small as boxes and connectors if you wanted to.


Greg Fretwell

#177608 - 05/08/08 11:23 AM Re: Purchase Orders [Re: gfretwell]  
macmikeman  Offline
Member
Joined: Jul 2002
Posts: 717
Honolulu, Hawaii
Purchase order setup is not difficult, and for a four man operation is critical. If you use Quickbooks you do it using the built in PO system and all the setup work is done for you. Taking time to review each invoice is a different but critical thing. A company that is growing soon learns that some routines like this are best left to office personel , and that free's up the boss's time. Or use an outside bookeeper service to do that for you, but they may not know didly about electrical pricing. Good luck in your enterprise and growth.


#177622 - 05/08/08 05:21 PM Re: Purchase Orders [Re: macmikeman]  
LK  Offline
Member
Joined: Jan 2003
Posts: 1,429
New Jersey
Randy,

The best system I have seen is the amercian express business card, they require the purchase information to reflect the description of the purchase, they really track things and will call you if even the appearance of wrong doing comes up, easy to use and the repores are great saves you a lot of paper work they even sort some billing by class or tax , something to look at before you go into a purchase order system, many of the fortune 500's are goint to the corporate credit cards, and what is really nice you can issue different cards to the employees that are using them with custom limits or special job or project tracking


#177637 - 05/08/08 10:24 PM Re: Purchase Orders [Re: LK]  
renosteinke  Offline
Cat Servant
Member
Joined: Jan 2005
Posts: 5,316
Blue Collar Country
My parts houses have been known to get confused ... and, as a result, the counter help must hate me!

Step #1 is asking them to make separate orders, by job. If I'm picking up for two jobs, I ask for two tickets.
Step #2 is reading from a list I've written down.
Step #3 is checking their paper to see if they called out the right stuff. I also need to make sure they're billing the right guy! There are likely several firms with names similar enough to yours for the "computer" to make a goof.
Step #4 is checking the order before I go. It needs to match what I first asked for - according to my written list.

Then there's invoice time. There's no law that you can only pay them once a month. I pay for parts as the job pays me ... that is, when a job pays me, I in turn cut a check to the parts house for the invoices on that job. This step really helps me spot inconsistencies - like lost credits, errant billings, bad prices, etc.

Let's face it ... you need to 'crunch the numbers" a few times, for different purposes. Boring and tedious - yes; but the information you develop will really help you keep tabs on your business.


#177820 - 05/13/08 06:53 AM Re: Purchase Orders [Re: LK]  
SteveFehr  Offline
Member
Joined: Mar 2005
Posts: 1,205
Chesapeake, VA
Don't mistake all this "protection" by credit card companies as a service to their customers. It's not. They're only protecting their own ass, because THEY are liable for any fraudulent use of a stolen card, not you.

The ease and utility of a business card is really undeniable, though.


#177858 - 05/13/08 09:56 PM Re: Purchase Orders [Re: SteveFehr]  
HEI_Inc  Offline
Member
Joined: Nov 2007
Posts: 23
Joliet, IL
I pay my supply house in full each month by the 10th. Saves me 2%. The way I look at it is the supply house did their part of the agreement by delivering the merchandise. Now it's my turn to do my part and pay them.


#177905 - 05/14/08 10:42 PM Re: Purchase Orders [Re: HEI_Inc]  
Sixer  Offline
Member
Joined: Aug 2005
Posts: 265
Canada
Originally Posted by HEI_Inc
I pay my supply house in full each month by the 10th. Saves me 2%. The way I look at it is the supply house did their part of the agreement by delivering the merchandise. Now it's my turn to do my part and pay them.

I wish my supplier gave a discount for early payment. Since they don't, I pay them on the last day of the following month by credit card. That gives me another 3 weeks of credit (total of 7 weeks) and when the credit card statement comes in I pay it out right away.
I did get an explanation from my supplier what happened to get double billed, along with a credit. Until I set up a system to track their invoices I will just have to be more diligent in reconciling at month end.
Thanks for all your responses.


Sixer

"Will it be cheaper if I drill the holes for you?"

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