Procurement
Acquiring goods and services.
Workflow
- 01Vendor Evaluation
- 02Bidding Process
- 03Contract Awarding
- 04Supplier Performance Review
Data in and out
- OUT Purchase orders to Suppliers, EDI and supplier portals · continuousWithout it: Suppliers work from email and there is no commitment record.
- OUT Goods and service receipts to Accounts Payable · continuousWithout it: Invoices block and become manual workarounds.
- OUT Supplier master to Accounts Payable · on changeWithout it: Payments go to unverified bank details.
If you change this
It implies 7 topics across 2 modules, including Financial Accounting which you might not expect.
See the path ahead →Why it matters
Accounts payable inherits whatever procurement hands it. An invoice with no purchase order has nothing to match against; a receipt nobody entered leaves the match permanently open; a supplier record created without verification is a fraud waiting for an invoice.
- It creates the commitment: A purchase order records spend against budget before the money is spent, which is the only point at which it can still be stopped.
- It creates the evidence: The goods receipt is what makes three-way matching possible at all.
- It creates the supplier: The vendor master originates here, and it is the highest-risk record in the finance system.
If you are replacing finance but not procurement, you are inheriting the purchase order and receipt data your matching engine depends on, from a system you are not changing. That dependency has to be named and tested, not assumed.
The workflow
- 01
Sourcing
Identify and evaluate suppliers capable of meeting the need, at the depth the spend warrants.
- 02
Contract award
Terms, pricing and obligations agreed and recorded where the buying process can see them.
- 03
Supplier onboarding
The vendor master record is created and verified, including bank details, tax registration and insurances.
- 04
Requisition
The business records a need; approval happens against budget and policy before commitment.
- 05
Purchase order
The commitment is issued to the supplier — scope, price, terms.
- 06
Goods or service receipt
What actually arrived is recorded, and when.
- 07
Supplier performance
Quality, timeliness and value measured against what was agreed.
What you need in place
- Vendor master control: Dual authorisation and callback verification for creating or amending bank details. This single control prevents most invoice-redirection fraud.
- Delegation of authority: Requisition approval limits configured to mirror the signed instrument.
- Catalogue and contract pricing: Held as data, so the order prices itself rather than relying on the buyer to remember.
- Receipting discipline: Somebody accountable for recording receipt. Unreceipted orders are the most common cause of blocked invoices.
- A non-PO policy: An explicit list of spend categories that legitimately have no purchase order, rather than treating each as an exception.
- Probity controls: For government and government-owned entities, procurement probity, conflict declarations and auditor-general reporting apply regardless of sector.
Questions to ask
01Receipting
Who records that goods or services arrived, and what happens if they do not?
Unreceipted orders block invoices, and blocked invoices become manual workarounds that defeat the control.
02Non-PO spend
What share of invoices arrive with no purchase order?
Measure it before designing the approval path, because the long tail is always larger than expected.
03Vendor master
Who can create a supplier and who verifies the bank details?
Separation here matters more than any other control in the cycle.
04Contract visibility
Can a buyer see the contracted price at the point of ordering?
If not, the contract is a document rather than a control.
05Tolerances
What price and quantity variance will we accept without re-approval?
Set deliberately. Too tight blocks everything; too loose defeats matching.
Metrics and KPIs to track
PO compliance rate
Invoices backed by a valid purchase order.
Unreceipted order value
Value ordered but not yet receipted, and its age.
Requisition cycle time
Time from requisition raised to purchase order issued.
Contract coverage
Share of addressable spend under a current contract.
Supplier master changes
Bank detail amendments per period, with the share verified by callback.
Maverick spend
Value bought outside contracted suppliers or agreed catalogues.
Alongside this