The documentary cycle of purchases and ‎stores and its types

If you want to expand and improve your company's business, the documentary cycle of purchases and stores is the ideal solution.

It is an integrated system through which you can determine your company's needs, know the volume of exports and imports, and the goods in stores. 

This article explains the documentary cycle of purchases and stores, its types, and its importance. 

What is the documentary cycle of purchases and stores?‎

The documentary cycle of purchases and stores is the process of ordering or buy products, goods, and tools from suppliers, obtaining them, inspecting them, storing them in warehouses, and then disbursing and selling them.
The documentary cycle includes several parties inside and outside the organization: the department that wants the products, the purchasing department, the warehouse department, and finally, the product suppliers. 

Types of the documentary cycle of purchases and stores

The documentary cycle of purchases and stores is divided into three main types: the first relates to purchases, the second refers to exchange and sale, and the third relates to damaged and returned goods.  

The documentary cycle for purchases

It is a set of procedures and steps by which the company obtains its necessary tools and products. These steps are:

1- A purchase request to the purchasing department.

The head of the department who would like to obtain one of the products sends a purchase order for a specific type and in a certain quantity to the department of the purchasing department. 

After the approval, the purchasing department sends the best offers for their order.

2- Choose the best price

The Purchasing Department checks, analyzes, and compares quotations from suppliers; To choose the best price for the company.

This step can be done manually or online by software that regulates the warehouse accounting process, such as ECPA’s Capital ERP software.

3- The supply order

The Purchasing Department sends a request to the suppliers, including the required items, quantity, the appropriate price, and the date and time of supply.

4- The receipt voucher

The Department of Stores receives the goods requested by the Purchasing Department and ensures that they comply with the approved data.

After verifying its authenticity, the storekeeper signs the receipt voucher.

5- Get the purchase invoice

Latest, the management obtains a purchase invoice that includes the goods obtained; To prove payment of the amounts owed to suppliers and add invoices to the ERP program of the warehouse accounting system. 

The documentary cycle for Sale and Distribution

The second type of documentary cycle of purchases and stores relates to selling and disbursing goods to merchants. The steps are:

  1. The Sales Department sends a request to the stores, which includes all the items sold, in addition to the date of exchange and the name and signature of the recipient.
  2. The warehouse management sends the distribution authorization to the financial department and keeps a copy.
  3. The company distributes the goods to the subsidiary stores until the customer receives them. 

The documentary cycle for damaged and returned goods

The last stage of the documentary cycle of purchases and stores is based on returning damaged and unusable goods to the supplier. Its procedures are:

  1. The storekeeper collects the damaged goods, classifies them, and records them in the company’s inventory.
  2. The storekeeper sends this statement to the company’s board of directors and the financial department and keeps a copy.
  3. The storekeeper records all information related to the damaged goods, such as type, item, and date of receipt.
  4. The administration department begins communicating with the suppliers to return the unused merchandise.

From the above, we note that it is difficult for department heads to successfully control the documentary cycle of purchases and stores without an assistant program. Therefore, ECPA provides the best module for managing warehouses and purchasing within its Capital ERP program. 

Advantages of warehouse management software from ECPA

ECPA is one of the leading accounting and legal consultancy firms. The company is unique in providing the Capital ERP program, which includes a set of modules and services, such as the warehouse and purchasing management module, which includes many features that can be summarized as follows:

  • The program controls the goods in warehouses of all kinds and types.
  • An integrated database of the goods in stock can be designed.
  • It gives items specific and different codes; To quickly learn information on particular varieties.
  • The program provides a detailed report on the goods in the store, such as their arrival date, prices, colors, and quality, and a detailed itinerary.
  • The program allows displaying more than one product at the same time; to facilitate comparison.
  • ECPA Warehouse Management Software provides a warehouse transfer document, which can be used when merchandise is moved from one enterprise warehouse to another.
  • It facilitates the inventory process and discovers damaged goods, as well as the goods that have been withdrawn from stores.
  • The warehouse management program considers the confidentiality and security of information. 

FAQs about the documentary cycle of purchasing and ‎warehousing

What is the procurement cycle?‎

It is a set of steps represented in studying the market situation, making a purchase ‎decision, issuing a purchase order, registering goods, and receiving invoices.‎

What is the importance of purchasing department?‎

The Purchasing Department makes the purchasing decision, in cooperation with the ‎organization's management, sets purchasing policies, and records data related to ‎the process.‎

Whom does the purchasing department follow?‎

The Purchasing Department doesn't follow a specific entity. It is an element of the ‎documentary cycle of purchases and stores and has many relations with all the ‎departments.‎

What is the relationship between the documentary cycle of ‎purchases and stores and the accounting cycle?‎

The accounting cycle is based on receipts and invoices stating that the company has ‎paid its financial dues. The documentary cycle of the stores gets those invoices from ‎the suppliers, which helps the institution's accounting cycle succeed.‎

What are the factors affecting the documentary cycle of purchases ‎and stores?‎

The documentary cycle differs from one company to another due to the different ‎types of company activity and the size of the company in the market.‎

In summary, the documentary cycle of purchases and stores takes place according to fixed steps that are difficult to change. It is a specific system that regulates departments’ work within the organization. The documentary cycle aims to improve the accounting cycle and facilitate the role of the financial auditor in determining the volume of expenses and imports, as well as the needs of the institution for goods and the size of goods in stock.
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