Purchase Requisitions And Orders Procedure
In the hospitality industry, it’s crucial that all financial transactions are handled with precision and accuracy. This is especially true when it comes to purchase requisitions and purchase orders in hotels.
To ensure that purchases are made correctly and in a timely manner, hotels must follow a standard operating procedure (SOP) for finance and accounting. This SOP should outline the process for creating purchase requisitions and purchase orders, including who is responsible for each step in the process and what documentation is required.
When a department needs to make a purchase, they should create a purchase requisition that includes the details of what they need, the quantity, and the estimated cost. This requisition should then be sent to the finance department for review and approval.
Once the requisition is approved, the finance department should create a purchase order that includes all of the necessary information, such as the vendor name, the items being purchased, the quantity, and the price. This purchase order should be sent to the vendor, and a copy should be kept on file for accounting purposes.
By following a standard procedure for handling purchase requisitions and purchase orders, hotels can ensure that all purchases are made efficiently and accurately and that they are able to maintain accurate financial records.
It is the policy of the hotel to require the issuance of an approved purchase order before ordering any goods or services for the hotel. The only exceptions to this policy are consumable food and beverage items, items for which an approved check request has been issued in advance of the purchase, contractual obligations for which a properly authorized contract exists, or a single item or groups of items costing collectively less than $10 [Mention your hotels limit here].
Purchase Requisitions And Purchase Orders SOP Procedure:
It is the Financial Controller/ Finance Director’s responsibility to administer this policy and the responsibility of each person charged with procuring goods or services for the hotel to adhere to this policy.
1) After determining if funds are available for the purchase of goods or services, a Purchase Requisition is a form, completed by an authorized person, requesting that needed items be issued fro... is completed by the person requesting the purchase. A Purchase Requisition details the information necessary to make a purchasing decision as follows:
a) Vendor information including name, address, and phone or e-mail contact information.
b) Quantity, unit price, extended price of units. Cost of freight, local tax, duties, and the total cost of this purchase.
c) Reason for purchase.
d) The availability of funds for this purchase.
e) On the purchase requisition, the fund availability area shows the chequebook’s prior balance, the amount of this purchase, and any balance remaining after this purchase. If adequate funds are not available, an explanation of which account category was reduced to increase the funds available for this purchase.
e) Only the General Manager has the authority to override chequebook restrictions and approve purchases wherein adequate funds are not available in a department’s forecast.
2) Purchases over $1,000 [Mention the amount as per your hotel policy] that are non-repetitive require two bids from competing vendors via the hotel’s online tender portal or by the manual process.
3) Repetitive purchases for goods such as office supplies must be put out for competitive bidding on an annual basis.
4) Contract services such as maintenance contracts must be re-bid online with at least three competitive bids as contracts expire.
5) The Purchase Requisition is routed for approval as follows:
a) The Department Manager may purchase goods or services up to $200 [Mention the amount as per your hotel policy] without further approval.
b) The Division Head (EC Member) must approve all departmental requisitions and have an approval level of up to $499 [Mention the amount as per your hotel policy] without further approval. Route requisition to A/P after signature.
c) The General Manager must approve all requisitions over $999 [Mention the amount as per your hotel policy] in value.
d) The Controller must approve all requisitions over $500 [Mention the amount as per your hotel policy] in value.
6) If the Purchase Requisition is approved, a number is assigned to the requisition, at which point the requisition becomes a Purchase Order (PO). The PO is simply a purchase requisition that is fully signed and is assigned a Purchase Order Number.
7) Nothing may be ordered by the hotel (excluding exceptions noted above) without a signed purchase order. The hotel reserves the right to refuse delivery of any good or service for which a signed purchase order has not been completed.
8) The Purchase Order is now routed to the Accounts Payable department for distribution of copies:
a) Copy 1 (Original) is routed back to the originator to facilitate purchasing the items. The vendor should be sent a copy of this purchase order.
b) Copy 2 (Yellow) is routed to the Receiving Department and is filed in a temporary receiving file until the goods are received.
c) Copy 3 (Pink) remains in A/P to be filed numerically.
9) Goods or services are now ordered by the originator or the purchasing department.
The following products or services are typically ordered by the following individuals:
|Product or Service
|Food and Beverage consumable products
|Food and Beverage Linen, China, Glass, Silver
|Food and Beverage Director/Director of Operations
|Rooms Linen and Glassware
|Rooms Director/Director of Operations
|Department Other Expenses
|Maintenance Contracted Services
|Director of Engineering
|GM, Controller or Director of Engineering
Training Summary Questions for Purchase Requisitions And Purchase Orders:
- Why is precision and accuracy crucial in handling financial transactions, particularly in the context of purchase requisitions and purchase orders in the hospitality industry?
- What is the recommended approach for hotels to ensure correct and timely purchases, and what key document should be followed for guidance?
- Why is it emphasized that hotels should have a standard operating procedure (SOP) for finance and accounting in relation to purchase requisitions and purchase orders?
- What details should be included in a purchase requisition when a department needs to make a purchase?
- After the creation of a purchase requisition, what is the next step in the process, and who is responsible for reviewing and approving it?
- Describe the process of creating a purchase order once the purchase requisition is approved. What information should be included in the purchase order?
- What role does the finance department play in the creation of a purchase order, and what documentation should be maintained for accounting purposes?
- Why is it important to send a copy of the purchase order to the vendor, according to the SOP for finance and accounting in hotels?
- How does following a standard procedure for handling purchase requisitions and purchase orders contribute to the efficiency and accuracy of hotel purchases?
- What are the potential benefits of maintaining accurate financial records in the context of purchase transactions for hotels?
- Explain the significance of the finance department’s involvement in the purchase requisition and purchase order process in maintaining financial accuracy.
- In summary, why is it crucial for hotels to have a well-defined SOP for finance and accounting related to purchase requisitions and purchase orders?
These questions cover various aspects of the information provided, assessing the reader’s understanding of the importance of SOPs in managing purchase transactions in the hospitality industry.
SOP Number: Finance and Accounting SOP – 01 Department: Accounts Payable And Purchasing Date Issued: 17-Jun-2021 Time to Train: 30 Minutes