Advance purchase model

Explain in detail Advance purchase model?

1 Answer(s)


hi anu!

purchase model explains the flow of the business purchase process or the steps involved in the purchase process. it shows the tasks and what data or information is exchanged between entities in doing those tasks.

a simple purchase model is basically 3 steps : 1) Create a Purchase Order (or place a purchase order with your supplier/vendor) 2) Receive the Goods from your supplier/vendor and lastly 3)Make the Payment for the Goods Received.

BUT as we all know that life is not so simple. it has multiple tensions in it. so the Advanced Model of Purchase Process tells you what those extra tensions are. Also apart from telling you about tension or glitches that might happen the Advanced Model also tell you the extra steps involved in purchase process when goods are sent by supplier prior to sending his invoice.

In the Advanced Model the 3 steps of the simple model are already there. But apart from them there is 1) Receipt of Goods (without Invoice but only with suppliers Delivery Note or Challan) 2) Checking and Acceptance of the Delivery Challan and sending supplier a copy of the Receipt Note to be accepted/signed by him. this is important if some of the good sent by the supplier are damaged. so it means the Delivery Challan says '100 items sent' but we find out after inspection that 10 items are damaged. so our Receipt Note says 'only 90 items received and 10 damaged'. because of this 3) Rejection Out is prepared showing the items returned because they were damaged. 4) Debit Note based on the Rejections Out is sent to the supplier.4)Supplier Invoice is received then for the Goods sent by him. this is compared with our receipt notes, debit note & rejections out before payment cheque is made. 5) finally payment is made to supplier. 6) Pre-closure of Purchase Orders may also be done prior to shipment of goods by supplier. this depends on the agreed terms with the supplier.

Hope this helps.