# Purchase

| Key Objective          | Target                                      | Achieved |
| ---------------------- | ------------------------------------------- | -------- |
| High quality suppliers | Key suppliers have no severe quality issues | YES      |

## Inquiry / Offer

Before purchasing employees must perform some research depending on the type and purchase amount. Generally, employees should always compare prices and also different vendors. For purchases above 1,000 EUR for single unit prices or above 50,000 EUR for total invoice expenses employees must always compare prices, argue why they choose a certain product and vendor and provide evidences of such research. Sometimes it can be applicable to not only compare different vendors but also different product types. This research may require to already request offers from potential suppliers and perform negotiations. Please use the [Investment Form](Purchase/Investment%20Form.md). (**R1**)

## Offer/Order approval

The approval of offers and orders must be performed according to the below mentioned approval table. The approval is done by signature on the offer/order with date. (**R2**)

### Approval table

| Amount                    | Approval by                                      |
| ------------------------- | ------------------------------------------------ |
| 0 - 250.00 EUR            | Direct superior (can also be head of department) |
| 250.01 - 1,000.00 EUR     | Head of department                               |
| 1,000.01 - 100,000.00 EUR | Head of department + Head of Finance             |
| > 100,000.00 EUR          | Head of department + Head of Finance + CEO       |

*It's possible to skip stages in the approval table. This means a higher instance may approve a purchase without a signature from an employee in a previous step of the approval process.*

## Purchasing

Only if an offer/order is approved by the authorized employees a purchase can be made. (**R2**)

The purchasing department creates an order in the IT system referring to the offer if available and forwards this order to the supplier. 

For small orders below 1,000 EUR which are done at online shops or direct purchases in local shops no order in the IT system must be made. The reason for this is to increase efficiency for minor invoices. For purchases in local shops it's also not necessary that the purchase department itself does the purchasing but another department may do them.

All documents related to the purchasing process (i.e. offers, negotiation documentation, order confirmations, invoices etc.) must be stored in the IT system and referred to the respective purchase. (**R3**)

## Supplier invoice validation

The invoice from the supplier must be stored in the IT system where it must be validated by the IT system. The system validates the following aspects (**R4**):

* Valid and correct VAT ID
* VAT amounts and percentages mentioned on the invoice
* Supplier rating for invoices above 1,000 EUR.
  * Ratings above 300, C or similar must be approved by the head of purchasing in the IT system
* Invoice amount is equals to the order amount (if available)
* Individual prices (if available in the order)
* Individual items on the invoice (if available in the order)

All invoices must be approved by the purchase employee handling the invoice. (**R5**)

In case of differences the head of the department the order was performed for and the head of purchasing in the IT system must approve the differences. (**R6**)

## Accounting

### Booking

The it system generates a booking suggestion for the invoice (**R7**). This suggestion is based on automatic invoice recognition and manually trained system behavior (see accounting process for more details). The accountant booking the invoice can adjust the booking suggestion (**R8**). Reasons for this can be a new business case, the booking suggestion must be split between multiple accounts, cost centers or cost objects which didn't get recognized or defined during the purchasing step.

The IT system generates a monthly booking list with all invoices and their booking. The head of finance has to perform random checks on this list and approve the list in the IT system. (**R9**)

### Payment

The accountant starts the payment process by telling the IT system to generate a list of all payment suggestions according to the invoice payment terms (**R10**). The system automatically calculates cash back and forex differences (**R11**). The accountant may add, remove and adjust invoices from the suggestion (**R12**). Both the accountant and the head of finance sign off on the payments in the IT system which also shows added, removed and adjusted payments. (**R13**)

## Sub Processes

### New supplier

If a supplier is not in the IT system the supplier must be added. The following information must be added to the IT system (**R14**):

* Full company name incl. legal form
* VAT ID if available
* Address
* Contact information
  * Main phone number
  * Main email address
  * Name of main contact person if available

> These information can be often found on the website (e.g. contacts, impressum) or on the letter head of invoices etc.

Adding additional information is often helpful.

The IT system is performing a credit score check, a sanction check and a VAT ID check (if available) in the background (**R15**). If these fail the purchasing department is automatically informed to check the supplier and make changes or the head of purchase may manually approve the new supplier (**R16**). Only after the approval of the supplier orders can be created for that supplier in the IT system.

### Regular supplier checks

Once a day every supplier is automatically checked against sanction lists. (**R17**)

2022-01-01 - Version 1.0
