Which department is responsible for the receipt of the goods from the vendor?

Reason for Policy 

The purpose of this policy is to provide guidance on the satisfactory receipt of goods and the return of defective goods.

Who is Governed by this Policy

• Staff
• Faculty

Policy

Receiving and Documenting Receipt of Goods 

All goods received by a department must be inspected and verified immediately against the purchase order or against another receiving document such as a bill of lading, packing slip or by noting the receipt on the invoice submitted for payment. The responsibility for receiving and documenting receipt of goods rests with the requestor of the goods. If not physically received by the requestor,the requestor must receive notification from the receiving party summarizing what was received so that an accurate record of receipt can be noted. 

1. Over/Under Shipments 

If you receive more or less than originally ordered and a purchase order (PO) was issued, notify Procurement and Travel Services immediately by e-mail at (include the purchase order number) to amend the purchase order. In the case of an overage, the department should work with the vendor to obtain a Return Merchandise Agreement (RMA). 

1. Changes or Cancellations 

If a requisitioner decides to change or cancel the quantity on a purchase order, notify Procurement and Travel Services immediately by e-mail at (include the Purchase Order number). Procurement and Travel Services will verify the change or cancellation with the supplier. 

If a supplier elects to change the quantity or substitute an item, the supplier should notify Procurement and Travel Services. However, if the supplier notifies the requisitioner, the requisitioner should amend the purchase order to match the substituted item by submitting a requisition to revise the purchase order information. 

1. Procurement Card (P-Card) Requirements 

If goods are purchased with a P-Card, the P-Card holder is responsible for: 1) inspecting the goods immediately upon delivery; 2) contacting the merchant when the goods purchased are not acceptable (incorrect, defective, etc.); 3) arranging a return for credit or an exchange. Credit must be returned to the P-Card. 

Defective Goods 

It is the policy of the university not to accept defective goods. When defective goods are detected while the carrier is present due to damage to the shipping box or carton, the bill of lading or other receiving document must not be signed and the defective goods should be rejected and returned to the supplier by the carrier.  

When defective goods are not discovered until the package is opened, and after the carrier is gone, the damaged or missing items should be documented and the deficiency or damage reported to the supplier.  The goods must be kept as is until the supplier claim inspection has been made or the supplier concurs. Most often an RMA is required to return goods to a supplier after the university has signed for its delivery. 

Warranties 

It is the requisitioning department’s responsibility to record warranties with the supplier, as applicable. In the event service is required during the warranty period, the requisitioning department is responsible for contacting the supplier. If the warranty service is not provided or is inadequate, notify Procurement and Travel Services for support. If the warranty expires and the department intends to extend the service, a requisition must be created via EAS to extend the warranty. 

A PO is useful for businesses with a complex organizational structure. If it has several departments, using a PO ensures the proper management of inventory ordered and accurate recording in the books.

1. Prevents duplicate purchase transactions: By entering POs in your bookkeeping system as soon as they’re made, your bookkeeper can catch any duplicate POs that have been created.
2. Organizes incoming orders: In a multidepartment business setup, the receiving department is responsible for receiving, examining, and confirming the receipt of goods ordered. The receiving department personnel compares the quantity and description of the goods on the PO to what’s received.
3. Tracks available inventory: POs will show in your inventory records as “goods on order” so that you 1) know goods are on the way and 2) avoid unnecessary reordering.

In QuickBooks Online, you can check inventory on POs by going to the Product and Services window, clicking on Sales, and then choosing Products and Services. Type the inventory item in the search bar, select it, and then click Edit (located on the far left). A side window that lets you modify inventory details will appear.

Viewing Quantity on PO on QuickBooks

1. Supports invoices: Invoices received from your vendors should be compared to POs to make sure that you’re billed for the proper goods.
2. Is a basis for disputing vendor billings: If the PO doesn’t match either the goods or the invoice received, you can provide a copy of the PO to your vendor to show what goods were ordered.

How Does a Purchase Order Work?

Follow this procedure to request a PO.

Step 1: Ask for an Approved Purchase Requisition

Before creating a PO, you need an approved purchase requisition form, which comes from one of your departments. For example, the accounting department needs to replenish its stock of continuous form papers. It must create a purchase requisition form and forward it to the purchase department.

Step 2: Create a PO Based on the Approved Requisition

After receiving the approved requisition from the user department or personnel, the purchasing department personnel will create a PO. The items in the PO should match the items requested.

Step 3: Send a Copy of the Approved PO to the Vendor

The purchasing department personnel will send a copy of the PO to the vendor. Note that its sales rep might even get in touch with you at this point to offer promos and discounts.

Step 4: Wait for Vendor Confirmation & Approval

If the vendor can accommodate the order, it’ll notify you that it approved the PO. You may ask the vendor to send the approved PO or wait until the goods are delivered.

Information To Include in a Purchase Order

You can create a PO using accounting software programs such as QuickBooks Online. It’ll even allow you to customize, print, and send POs to your vendors. The image below is an example of a PO generated by QuickBooks Online.

Purchase Order from QuickBooks Online

1. Company Details: Indicate your company’s name, address, and contact information. You may add a logo to personalize the PO and make it stand out from other POs.
2. Document Title: Display the words “Purchase Order” prominently in the document to prevent confusion. Sometimes, people mistake .
3. Vendor Details: Insert the vendor’s name and address.
4. Recipient’s Details: Insert your company’s name and main office address. If you store your inventory elsewhere, you should enter the warehouse address, not the business’ main office address. You may also indicate the point person in the warehouse.
5. PO Number: The PO number is a sequential numbering system that’s unique to a purchase order. You can use the PO number to keep track of orders.
6. Method of Payment: Since you’re the one sending the PO, it’s best to indicate the most convenient method of payment. Otherwise, the vendor will inform you if there are alternative payment methods available.
7. Date Needed by Buyer: Set a date when you need the goods delivered to your address. It’s best to set this date two to three days earlier than when it’s needed. This allowance gives a buffer in case of delays in delivery, such as bad weather and canceled flights.
8. Itemized Description of Goods and Services Ordered: List the details of the order in this section. It always pays to be specific to the letter because it reduces errors and mistakes in fulfilling the order.
9. Notes: Adding special notes to the vendor, like who the point of contact is and how to reach them, can speed up the processing of the PO in case some goods aren’t available.
10. Approved Signature: The vendor should affix a signature on the PO. The signature means that the vendor has accepted the order, making the PO a legally binding contract.

Purchase Order vs Invoice

A PO is created by the customer to start the purchase process, whereas an invoice is a document sent by a vendor requesting payment from a customer when the sale is complete.

Purchase Order vs Sales Order

Sales orders (SOs) are internal documents used by a vendor to fulfill a customer’s order. When customers order goods, SOs document the order and share that information with all the departments involved in fulfilling the order. Meanwhile, POs are sent by the customer to the vendor. When a vendor accepts a PO from a customer, they then create an SO to use internally.

Purchase Order vs Receipt

A receipt is provided by a vendor to a customer showing that the customer has paid the amount due. Customers should request receipts for vendors anytime a payment is made in case of any confusion. Whereas receipts provide proof of payment, POs provide proof of an order a customer placed with a vendor.

Bottom Line

A PO, an important internal and external source document, is a request to purchase goods. When the vendor accepts your order by signing the PO, they have created a legal obligation to provide the goods and bind you to make payment when the goods are delivered. Internally, you can use POs to manage incoming inventory orders and allot cash for vendor payments.

Who is responsible for goods receipt?

Who is responsible to update goods receipt?

Which department is responsible for preparing a goods received note?

Which department is responsible for ensuring that the correct goods are delivered to customers?