SOP For Purchase Requisitions And Purchase Orders

SOP Number: Finance and Accounting – 01

Department: Accounts Payable And Purchasing

Date Issued: 17-Jun-2021

Time to Train: 30 Minutes

Purpose of this SOP

It is the policy of the hotel to require the issuance of an approved purchase order prior to 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 authorised 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 Directors 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 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 prior balance, amount of this purchase, any balance remaining after this purchase. If adequate funds are not available, an explanation of which account category was reduced in order 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 in nature require two bids from competing vendors via the hotels 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) Department Manager may purchase goods or services up to $200 [Mention the amount as per your hotel policy] without further approval.

b) Division Head (EC Member) must approve all departmental requisitions and has 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) General Manager must approve all requisitions over $999 [Mention the amount as per your hotel policy] in value.

d) 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 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: 

Purchase Authorization Chart

Product or Service

 Who Orders

Food and Beverage consumable products

Purchasing Department

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

Department Managers

Maintenance Contracted Services

Director of Engineering

Capital Goods

GM, Controller or Director of Engineering

Training Summary Questions for Purchase Requisitions And Purchase Orders:

Q1. What is the purpose of the Purchase Requisitions And Purchase Orders SOP?

Q2. Who is responsible to order the Capital Goods?

Q3. How many copies of the Purchase order is printed?

Q4. Explain how the Purchase Requisition is routed for approval?