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30 Aug

Why Have a Formal Procurement Process?

The procurement process is one of the weakest points of integrity in the business process. While there are plenty of controls on handling customer payments and check writing, purchasing guidelines tend to be flimsy and ignored in many businesses.

In my time as an MS Dynamics implementer, I have had:

  • two clients whose bookkeepers (or controllers) were caught skimming money
  • a former employer file bankruptcy and shutter the business because a project manager doctored his paperwork
  • a client catch a vendor invoicing improperly.

The one thing each of these events have in common (besides large amounts of money being lost) is that each company went about its business process unaware its employees were taking advantage of them. Here are some staggering statistics from CBS News research on employee theft:

  • Organizations lose 5% of revenue to employee fraud
  • One third (1/3) of employees have committed fraud at some level
  • One third of corporate bankruptcies are due to employee fraud
  • The US Chamber of commerce reports 75% of employees have stolen something sometime in their career.

The fact is, mistakes get made – on purpose or on accident. Our job, through the bookkeeping process, is to catch those mistakes and preferably, prevent them from happening in the first place. Whether or not a company desires to acquire a purchasing software package to help with this, a review of how the company handles purchasing can yield a large return on investment.

Here are some places to investigate during a procurement review:

  • How much are employees allow to spend? How are their limits set?
  • How is approval handled for large purchases? Can AP easily verify approval for any invoice presented for payment?
  • How are vendors held accountable for their invoices?
  • How are vendors chosen and approved? Who can set them up in the accounting system?

Answering these questions honestly can shed light on problems in the business process before we even have to start talking about a tool to assist us.



Owners of Microsoft Dynamics SL (SL) have a very good purchasing tool at their fingertips. When set up and joined with a solid business process, SL’s purchasing module allows for

  • Requisition submission
  • Purchase Order creation and tracking
  • Receiving/returning
  • Three way matching
  • And more

When Purchase Orders are implemented in SL, the AP Clerks’ routine actually has less keystrokes and they receive positive feedback that an invoice is approved and correct before releasing the voucher for payment.

For assistance in assessing your purchasing procedures, be sure and contact your Dynamics partner today!

Butch Adams
Conexus SG
Dallas, Texas
Butch Adams on Google+

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  1. Why Have a Formal Procurement Process? - Microsoft Dynamics SL User Tips and Highlights - Microsoft Dynamics SL - Microsoft Dynamics Community

    August 30, 2013

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