You are here
Example:-
Suppose a new employee Mr Akash joins a company as Sales Executive.
He needs to get Visiting Cards Printed
Whom should he ask for approval?
His Sales Department, Accounts Department or Admin Department?
-a-
Since he has joined Sales Department as Sales Executive,
He should contact his Manager in Sales Department
-ea-
Which Manager in Sales Department should he approach
Assistant Manager, Sales Manager Sales, Vice President Sales or Sales Head
-a-
In Companies there is Expense Approval Matrix (Purchase Authorization Chart) for Different Department
It contains list of expenses upto which amount can be approved by whom
Higher the amount of expense, higher the level of Manager whose approval required
Example of Expense Approval Matrix (Purchase Authorization Chart)
-ea-
How should Approval be taken
Oral or Written?
By Email or Writing a Letter or Signing a Form?
-a-
Manner of Approval also depends upon Companies Policy
Different types of Approval for Different expenses like
| TYPE OF APPROVAL | USED IN CASE OF |
| Sign on Travel Expense Report | For Travel Expenses |
| Sign on Material Requisition Form | In Case of Production Department in Factories |
| Sign on Printed Voucher |
Used for Small Day to Day expenses like Pizza for Employees, Also used in Govt Companies |
| Email Approval |
Used in MNC's |
| Agreement |
Used for For Services like Rent/CA Professional Service/Security Guard Service |
Note:-Oral Approval should not be taken as there is no proof of the same
-ea-
Now Suppose Approval has been taken,Who will go for purchasing Visiting Cards
Mr Akash ,his manager or some other person?
-a-
There is also policy in Companu about who will undertake the purchase
Example
|
TYPE OF EXPENSES |
PURCHASE BY |
|
Production Expenses in Factory |
Purchase Department |
|
Routine Office Expenses |
Admin Department |
|
Computer and Server |
IT Department |
|
Accounting and Tax Softwares |
Accounts Department |
|
Small Companies |
Purchase by Initiator (Akash in our case) |
-ea-
Now there are Different Vendors in Market. How to select the Vendor for purchasing goods?
-a-
In Companies, there is policy to obtain quotations of different vendors
Higher the expense, more the number of quotations required
Example
|
Expense Upto |
Number of Quotations Required |
|
Upto 10000 |
2 Quotations |
|
10000-100000 |
3 Quotations |
|
>100000 |
5 Quoations |
-ea-
Now suppose a vendor is Selected, What Document to be issued to him?
-a-
A PO (Purchase Order) should be issued by Company to Selected Vendor
It contains
- Name of Vendor
- Quantity, Rate and Amount as fixed
- Payment Terms
-ea-
Now suppose Vendor sends goods to the Company, Who will receive and check it?
-a-
First it will be received by Security Guard Register who will put an Entry in his GOODS ENTRY REGISTER
Next, it will be checked by Some Designated Person
Example
- Factory Purchases are checked by Stores Department who after checking stamps/issues a GRN (Goods Receipt Note).GRN Mentions Quantity actually received by Company.It is either in form of
- Stamp on Invoice/Bill
- Separate Page printout which is attached to bill
- Office Expenses are checked by Admin Department who after checking usually signs on Invoice
-ea-
Note:-
Only after this is Invoice received by Accounts Department along with Attached PO/GRN
He performs a number of steps before,during and after passing the entries
Lets study these steps one by one
