Controlling Purchase Costs – Dealing with Purchase Problems
Like most areas of business, purchases aren’t completely problem-free; in fact, there are lots of different ways that troubles can arise. Orders may be filled incorrectly or incompletely, merchandise may be damaged while it’s being transported, products may be of lower quality than expected (particularly when dealing with a new, untested vendor), and some shipments do quite literally get lost in transit. These troubles call for some level of price reduction from the vendor; however, trying to work with your vendors to sort things out can make them more open to working with you should you need payment extensions.
The first rule of purchases is this: inspect before you accept. Once you accept and sign for a delivery, it’s yours, as is. If you discover a problem after the fact, it’s your problem. That doesn’t mean your vendor won’t work with you to fix the problem; it just means that the order is legally yours once you sign for it, and that makes you legally obligated to pay for it. Avoid this problem by inspecting every delivery before you accept it.
Make sure that the goods you’ve received are in fact the goods you have ordered. While the quickest way to do this is to match the packing slip (usually attached to the outside of the box) to your purchase order, that’s not the best way. Open each box and look through it to make sure it contains everything that should be there, and that no items are broken or damaged.
If that’s not really feasible, at least check the outside of each carton or container to make sure it’s not damaged; if any are, you can open them to make sure the goods inside are unharmed. Count the items (or cartons) to make sure the agreed-upon quantity has been delivered. When it all checks out, sign off on the order.
If there’s something wrong with the order, get on the phone with the vendor before signing anything and before the delivery driver leaves. You have a few options here. First, you can refuse the entire order. Second, you can accept correct and intact items but refuse anything that’s wrong or dam- aged; if you do this, indicate on the delivery sheet which items you’re refusing and why, and make sure that the delivery person initials it. Third, you can work out a deal with the vendor to accept the entire order on the condition that he issue a credit allowance for any incorrect items on the shipment (don’t do this for broken or damaged items, only wrong ones). Do this only if you think you can sell the items.