BUSINESS BUYING AND SELLING PROCEDURES

In the previous series, I touched on how you can go about starting your own business: the personal attributes required, the four wheels upon which a business moves, introducing the necessary capital and the documentation of your business processes.

 This article, together with a few more to follow, assume you are now into business and will concentrate on minimizing losses by putting in place internal control systems.

One way of increasing profits is by minimizing operational financial losses. By operational financial losses I mean preventable, unforeseeable and unnecessary loss of assets (business property) that may happen in the process of carrying out business. Such losses may arise as a result of outright pilferage, inefficiency, abuse or improper application of business assets.

 The one way of mitigating the undesired effects of operational financial losses is to put in place internal controls that facilitate checks and balances as employees go about their work.

 Internal controls are systems and procedures put in place in advance to provide guidance to employees as they go about.  Systems define how work will be carried out. Systems lay out the procedures which one has to follow as s/he carries out tasks assigned to him/her.

 In this article, I am going to lay out basic procedures you might want to follow when buying and selling. Buying and selling are major operational tasks and it is important right from the start to define how these will be carried out and to ensure that whoever is assigned to such tasks is well aware of how they are carried out.

Unless your business is a one person operation, you cannot afford to let one person do your buying, stores and selling. Common sense tells you what can happen in between. It is important that these duties are separated by assigning them to different people. 

 Buying

Buying is a key function in your business which has to be properly managed. The function ultimately determines the quality of goods you are going to sell and the price at which you are going to sell them for.  To remain competitive on the market place, buying function must never be compromised. The value your customers derive from the product you sell to them will very much determine the future relationships.

 Who does the Buying?

It is the Buyer. This person must, above all be honest and not prone to  corruption He must be familiar with the industry and must have both academic and professional qualifications which will always enhance tactical decision making.

What documents does he come in contact with?

• Internally generated Purchases Requisition
• Suppliers’ quotations
• Order generated by him

The Buying Procedure