Purchase Cycle

• Purchase cycle starts from creation of purchase requisition / order ends with final payment to supplier along with the following activities as shown in the below figure.

1. Request for Quote:

First Purchase quote has to made to the supplier whenever the products need by the customer at which quantity.

2. Quotation:

• Once the purchase for quote is received, then the supplier will search for the materials, where available and when available. That is called Material determination. 
• Once the material determination is done, He will send the quotation to the customer on which date products will be available at what cost. 

3. Creating PO:

• After accepting the quotation, Customer will start creating the PO.
• PO includes order created date, PO number, DBA, billing address, shipping address, name of the product, description, no. of quantities, payment terms, shipment terms, terms and condition that are created by the customer side.

4. Creating Order Confirmation: 

• Once the PO is received by the supplier, Again he will start creating the order confirmation by accepting the terms and conditions , payment & shipment terms if not again supplier will makes changes in terms and conditions and payment & shipment terms. 
• Once done, Order confirmation will be sent to the customer. 

5. Initial Payment:

• After receiving the order confirmation, Few supplier will request for the initial payments should be done before shipment is done.

6. Products with Invoice will be Sent :

• After receiving the initial payment,The supplier will shipped the inventory along with invoice/bill.
• In few cases, Invoices will be sent to the fax or by mail.

7. Clearing Payment:

• After receiving the inventory, The customer will start clearing the payment by COD, by cheque/check,etc.

8. Purchase Return:

• If the inventory is not up to the mark, having any damage, any mismatch, quality/colour  issues,etc.
• The customer will start creating purchase returns.

9. Creating Credit Memo:

• Once supplier received the purchase return and goods, Supplier will start creating the credit memo and amount will be refunded back to the customer.