Purchase with a purchase order procedure

Procedure

Purchase Orders are used for the acquisition of goods or services for the following:

  • Physical goods greater than or equal to $20,000 in value, or when the vendor requests a purchase order number. Goods paid for by credit card or an emergency replacement item ordered without a purchase order are exceptions to this rule.
  • Recurring Services from a vendor, where two or more invoices from the same Vendor will be posted under a one order – i.e. ongoing supplier of water or milk.
  • Or where the value of the service is greater than $20,000 (unless prior approval has been obtained from their approved financial delegate and the purchase will be completed without a purchase order. (Refer to Purchases without a purchase order).

All travel related acquisitions do not require a Purchase Order and are facilitated by the Travel Approval Process. Invoices not paid by credit cards are approved and are processed as Purchase without a Purchase Order.

A purchase order should not be requested / raised if RMIT has already received the vendor invoice. Please refer to Purchases without a Purchase Order for details on how to progress the payment of an invoice.

Overview

Purchasing goods and services

A high level overview of the purchasing process is shown below.

Procurement processing department

A high level overview of the processing of purchase orders is shown below.

Process flow

Flowchart depicting process flow of a purchase via a purchase order is shown below.

Procedure

Purchase Requests shall be raised by Requestors and approved by the Approved Financial Delegates in each department. The Approved Financial Delegation list and associated authorisation limits is available from Financial Delegation of Authority

Local practices may require the Requestor to verify the availability of funds to cover the request. The Requestor should contact local finance staff to ascertain the procedure.

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Creating the purchase request

The following procedure is performed by the Requestor of the goods and services unless otherwise stated:

  • Liaise with the relevant supplier(s) to obtain the best prices for the goods or services required.
  • If assistance regarding supplier selection is required, contact support services from Strategic Sourcing and Procurement Group.
  • Select the vendor in accordance with RMIT’s quotation and tendering requirements.
  • Please refer to the policy when purchasing goods / services from a preferred supplier as their requirements are different from the Tenders & Quotation requirements (put in link to Tender & Quotations).
  • All ‘Dangerous Goods’ must be treated with care and caution as detailed in the Occupational health and safety policy. This covers the purchasing, storage and use of ‘Dangerous Goods’.
    • Review the ‘Dangerous Goods Handling Protocols’.
    • Complete the Risk Assessment form which can be downloaded from the Occupational health and safety policy
    • Document any new dangerous goods handling protocols.
  • Once the vendor has been identified, verify if the vendor has previously supplied goods and services to RMIT. To complete the verification process:
    • Use SAP; or
    • Use the Active vendor (XLS 4 MB) excel file.
    • Contact a Purchasing Officer or local Finance Staff for a current listing or refer to RMIT preferred – approved suppliers.
  • If the vendor is a new vendor, refer to: Create new vendor.
  • Download and complete the appropriate forms;
  • For the provision of consulting services, complete the ‘engagement of contractor / consultant form (PDF 199 KB, 4p)
  • Complete the form including:
    • Vendor details, items and price etc.
  • Complete the internal order and cost element to where the item will be expensed.
  • If the Requestor wishes to allocate the purchase amount across future accounting periods, a supplement document listing the amount by period is to be attached to the Purchase Request. (I.e. The purchase order is the annual supply of bottled water. The Requestor wishes to allocate this commitment over the estimated monthly use) and enable better understanding of future commitments.
  • Review Approved Financial Delegation of authority listing.
  • Seek approval and endorsement from responsible staff member (i.e. Program leader if to be approved by School head, or Head of School if to be approved by PVC). If more than one endorsement is required, the 2nd endorser will countersign the first endorsement. I.e. The field personnel request the good/service; the Project Manager endorses the request; the Executive Director provides the second endorsement; and the Vice President Resource approves the request.
  • Based upon the value of the transaction submit documentation for approval to the Procurement Processing Department and school Approved Financial Delegate (Section 2.4.2).
  • Respond to any questions regarding the purchase in a timely manner.

The purchase request is for internal processing use only and should not be forwarded to external vendors.

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Approving purchase requests

The completed Purchase Request is to be approved by the Approved Financial Delegate in each department in accordance with their approval limits.

  • Verify that the Requestor has signed the Purchase Request.
  • The Requestor obtains approval from the Approved Financial Delegate.
    • Joint approval from an Endorser is required if the Requestor does not report to the Approved Financial Delegate.
    • If more than one endorsement is required, the 2nd endorser will countersign the first endorsement. I.e. The field personnel request the good/service; the Project Manager endorses the request; the Executive Director provides the second endorsement; and the Vice President Resource approves the request.
    • The Approved Financial Delegate at their discretion verifies the Purchase Request details.
    • Verify the amount of the Purchase Request with their local finance support team.
    • Contact the Requestor to verify the requirement for the goods or service if not appropriately explained upon the request.
  • Approved Financial Delegate approves the Purchase Request if the amount is within their authorisation limits.
  • If the amount of the Purchase Request is outside the Approved Financial Delegate authorisation limits, higher level approval is to be obtained.
  • If higher level approval is required, the Approved Financial Delegate and the Endorser must endorse and recommend the Purchase Request.
  • If more than one endorsement is required, the 2nd endorser will countersign the first endorsement. I.e. The field personnel request the good/service; the Project Manager endorses the request; the Executive Director provides the second endorsement; and the Vice President Resource approves the request.
  • The Endorser seeks higher level approval.
  • The Approved Financial Delegate sends the approved Purchase Requests to Procurement Processing Department.
  • Should the Requestor or Approver(s) wish to verify the status of the Purchase Request, they are to use SAP to determine if the Purchase Order has been created or secondly email the Procurement Processing Department.

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Creating purchase orders

  • The following procedure is performed by the Procurement Processing Department unless otherwise stated:
  • Review the Signatory Listing.
  • Use the e-number or name and search the Signatory Listing.
  • Verify the approver(s) of the Purchase Request against the Signatory Listing.
  • If the Approved Financial Delegate is listed on the Signatory Listing and the transaction is within their Approved Financial Delegation, approve the Purchase Request.
  • If the Approved Financial Delegate cannot be identified from the Signatory Listing:
    • Contact the Requestor and seek assistance in to verify the Approved Financial Delegate.
  • If the Approved Financial Delegate are not listed on the Signatory Listing for example:
    • The staff member is acting on behalf of a Approved Financial Delegate; or
    • A new staff member holds an Approved Financial Delegate role and the signatory listing have not been updated to reflect the change.
    • Seek approval from the Financial Services Delegate. The Financial Services Delegate can approve on-behalf of the Requestor with the provision of sufficient supporting documentation.
  • If the Purchase Request is outside the authorisation limits of the Financial Services Delegate, refer to the Financial Services Listing for the approver, and then the Purchase Request will be returned to the Requestor to obtain the approval of a recognised Financial Delegate.
  • Upon Purchase Request approval, enter the Purchase Request details:
    • If the amount is less than $50,000, create the Purchase Order via SAP ME21N.
    • If the amount is greater than $50,000 create a requisition via SAP ME51N.
  • Requisitions greater than $50,000 are sent to the Procurement Manager for review.
  • Once the Procurement Manager has reviewed and approved the Requisition, it is released.
  • The Purchase Order is created within 48 hours of receipt and approval. If the supporting documentation is not received with the Requisition, the approval and processing of the Requisition will be delayed until sufficient supporting documentation has been forwarded to the Procurement Processing Department.
  • Once the Purchase Order is created, an automatic email notification is sent to the Requestor based upon their staff e-number designated on the Purchase Request form. If local practice dictates, and if the Requestor is not the finance support staff member, the Requestor can forward the automated email to their local finance office.
  • Forward the Purchase Order via fax to the vendor.
  • Write the SAP generated purchase order number on the Purchase Request form and file by Purchase Order number.

Foreign currency purchase requests greater than $50,000 in value: the purchasing officer will forward a copy of the purchase request to the Associate Director Financial Operations and the Treasury Accountant to assist with any decision to manage RMIT foreign currency risk.

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Vendor creation

The following procedure is performed by the Procurement Processing Department; unless otherwise stated:

  • Receive the New Vendor request form and create the vendor based upon the details provided.
  • If no form is received, and a new vendor is required, contact the Requestor by email or fax to allow the originating area to obtain and return the information to by completing the requisite New Vendor form.
  • The Requestor received the request from the Procurement Processing Department and completes the New Vendor form based upon the details known and if additional information is required, the Requestor will contact the Vendor directly.

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Receipting goods or services process flow

Receipting goods and services process flow

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Receipting goods

The following procedure is performed by the Requestor of the goods and services unless otherwise stated:

  • Receive delivery of the goods with an attached invoice and picking slip.
  • Verify the contents of the goods received to ensure that all items have been received as per the invoice and all items are not faulty or damaged.
  • If the goods received are damaged, mark the invoice ‘Goods Faulty – Invoice Not Accepted and return the goods and the attached receipt advice/invoice to the supplier with a request for the order to be re-filled.
  • A credit claim will only be initiated by the Procurement Processing Department when the invoice has been paid and the goods received are faulty. The Procurement Processing Department will contact the vendor and seek resolution.
  • If the goods are received in a satisfactory condition, proceed as follows.
  • Verify the Purchase Order number is displayed on the invoice/receipt advice.
    • If it is not listed, transcribe the purchase number to the PO Label and affix to the invoice/receipt advice. If the invoice is smaller than the label, attach the invoice and the label to a separate clean piece of A4 paper.
  • Acknowledge receipt of goods upon receipt advice by denoting your e-number and the date of receipt of goods/services.
  • Forward receipt advice and invoice the Procurement Processing Department for processing.
  • The following schools are exempt from forwarding the receipt advice to the Procurement Processing Department for processing. These Schools’ laboratory and store manager will conduct their own good receipt processing.
    • School of Medical Sciences.
    • School of Applied Sciences.
  • If the Requestor receives more goods than ordered:
    • Return additional goods to the vendor.
    • Make appropriate amendments to the Purchase Order.

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Receipting services

The following procedure is performed by the Requestor of the services unless otherwise stated:

  • Verify the services performed and receive an invoice for the services.
  • If the Requestor does not receive the services directly, the staff member will be contacted to acknowledge the receipt of services and initial the invoice to acknowledge “Receipt of services as contracted”.
  • Approve/confirm that the services has been satisfactorily performed and the invoice contains the purchase order number.
  • If it is not listed, transcribe the purchase number to the Payment Approval form and affix to the invoice/receipt advice.
  • Acknowledge receipt, denote your e-number and date the invoice as evidence of review.
  • Forward receipt to the Procurement Processing Department for review.

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Contract staff services

The following procedure is performed by the Requestor of the services unless otherwise stated:

  • For the engagement of the contractor, it is best practice to insist upon the inclusion of an authorised timesheet with the invoice, so as to ensure efficient processing.
  • Verify the services performed and receive an invoice for the services.
  • If the Requestor does not receive the services directly, the staff member will be contacted to acknowledge the receipt of services and initial the invoice to acknowledge “Receipt of services as contracted”.
  • Validate the invoice against the contracted staff timesheets. For processing purposes, approved timesheets act like Good Receipts Notes and shall be processed accordingly.
  • If there is a discrepancy, contact the Vendor directly.
  • If the invoice matches the timesheets, approve/confirm that the services has been satisfactorily performed and the invoice contains the purchase order number.
  • If it is not listed, write the purchase number to the PO Label and affix to the invoice/receipt advice. If the invoice is smaller than the label, securely attach the invoice and the label to a separate clean piece of A4 paper.
  • Acknowledge receipt, denote your e-number and date the invoice as evidence of review.
  • Forward receipt to the Procurement Processing Department for review and SAP input.

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Processing goods/service receipts

The following procedure is performed by Procurement Processing Department Staff or designated laboratories/store managers unless otherwise stated:

  • Receive all goods/service receipt notices in a timely manner.
  • Review the receipt advice;
    • If the advice does not contain the PO Number, contact the Requestor or Vendor to obtain the Purchase Order number.
  • Process goods/service receipt advice against purchase order using SAP Transaction MIGO
    • Enter the delivery note number in the delivery note field.
    • Use the header text field for any additional information.
    • For contractors the following naming standard should be used: Invoice #, Name and Weekending date.
    • For services enter the relevant period to which the invoice or supporting documentation relates to.
  • File receipt advice by the purchase order number.

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Processing goods/service invoices

The following procedure is performed by the Payable/Purchasing Department Staff unless otherwise stated:

  • Receive all invoices in a timely manner. To avoid duplicate payments only original Invoices can be processed.
    • Contact the vendor and request original invoice. Original re-prints will contain the same invoice number and are acceptable. SAP generates a warning notifying the operator if the same invoice number has previously been processed by the same vendor.
  • Date stamp each invoice.
  • Verify the purchase order number on the invoice.
  • If the purchase order number is not displayed on the invoice:
    • Contact the Vendor for information on the Requestor.
    • Scan the invoice and email to the Vendor.
    • Write the purchase number to the PO Label, the e-number and the date and affix to the receipt advice. If the invoice is smaller than the label, securely attach the invoice and the label to a separate clean piece of A4 paper.
  • The RMIT Payment Approval label is to be used for authorisation of invoices. Refer to Form 6: Payment Approval.
  • Process invoice against the purchase order using SAP Transaction MIRO.
  • If there is a discrepancy beyond the in-built SAP tolerance limits:
    • Determine the discrepancy.
    • If the variation is exists (and is outside the pre-configured tolerance limits) between the original purchase request and the vendors invoice, contact the Requestor via email. The Requestor is required to amend the PO and seek approval of the amendments by the Approved Financial Delegate.
    • The Requestor is to contact the vendor regarding the difference.
    • If the Vendor advises that there is a price rise:
    • The Requestor is to amend purchase order for the ‘Recurring Invoice’ underpinning the Purchase Order.
    • Refer to purchases without a purchase order
    • If the variation results from a processing error, adjustments will be made when identified by the Procurement Processing staff.
  • Process the invoice.
  • File the invoice advice by Vendor name and month posted.
  • The invoice will be processed in the appropriate ‘Payment Run’ based upon the invoice date and the vendor’s trading terms.

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Amending purchase orders

The following procedure is performed by the Requestor unless otherwise stated:

  • Receive information from the Procurement Processing Department staff regarding the discrepancy of the Purchase Order.
  • If the Purchase Order is amended:
    • Make the appropriate amendments using the Purchase Request Amendment form;
    • Denote on form that request is for the adjustment of an existing order.
    • If there is a price increase by the vendor, attach supporting documentation to the Amendment to substantiate the request.
    • Receive approval for the amendments, from the Approved Financial Delegate for the total of the revised request.
  • If the Purchase Order is reversed, refer to Purchase without a Purchase Order.

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Cancelling purchase orders

The following procedure is performed by the Payable/Purchasing Department Staff unless otherwise stated:

  • The Procurement Manager receives an email from the Requestor to cancel the Purchase Order. The email is to contain the Purchase Order # and the Vendor #.
  • The Procurement Manager forwards the email to the Payable/Purchasing Department Staff.
  • The Payable/Purchasing Department Staff cancels the Purchase Order as stated in the email.
  • Any additional information attached to the Purchase Order is also cancelled.
  • If the vendor requires notification of purchase order cancellation, the Requestor is responsible for contacting the vendor, if the Purchase Order has been dispatched.
  • All Purchase Order cancellations are made within 24 hours of receipt of email notification requesting cancellation.

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Payment processing

RMIT has payment terms of 30 days from the date of the suppliers invoice.

The following procedure is performed by the Payable/Purchasing Department Staff unless otherwise stated:

  • Receive Original Invoice.
  • Input original invoice using SAP Transaction MIRO
  • RMIT produces weekly payment runs:
    • Cheque runs are conducted each Wednesday.
    • EFT Payments are made each Thursday.
  • Payment Proposals are processed each Monday. The payment proposal contains those invoices due for payment based on the following:
    • All invoices entered by the previous Friday.
    • The selected payment date.
    • Alpha and numeric selection of all vendors.
  • The Payment Proposal provides the total amount of payments due for the week.
  • The Payment Proposal is submitted to the Associate Director (Business Advisory, Financial Services and the Business Analyst consultants preparing the cash flow forecast).
  • Actual Payment runs are scheduled.
  • Cheque Register and EFT register are submitted to Associate Director (Business Advisory, Financial Services or alternate) for review.
  • Request for Payments made outside the specified protocol, must be sent to the Associate Director (Business Advisory, Financial Services) clearly stating the reasons for the payment.
  • If the Associate Director (Business Advisory, Financial Services) approves the payment, they contact the Accounts Payable Team Leader to initiate a special payment run for the Vendor.
  • Clarifications on any payments are responded to in a timely manner.

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