Let's begin by thinking about all the things that need to happen when an employee in your company needs to purchase something. We'll do this in story form, which will give you a feel for the steps that need to be included in your procedure document.
An employee in your company decides that he needs something to make his job easier. Perhaps he would really like a new piece of software. He researches the software, figures out which vendors sell it and how much they charge, and decides which vendor offers the better deal. These steps are called the needs analysis or needs identification and the vendor/supplier selection parts of the purchasing process. They are usually done at the individual or team level.
Your procedures document will start at the next phase in the process. The employee will now fill out a purchase requisition or request form, providing details about what he needs, who sells it, how much it costs, and how it can be procured. He will turn this form in to the person in charge of purchasing for his department (or perhaps for the entire company depending on the business's size).
The person in charge of purchasing will examine the request and see if it falls within the department's or company's budget. They will also send the request to other individuals for review if necessary. This usually happens if the request is quite expensive. A new piece of software would probably be approved or rejected by the person in charge of purchasing.
If the request is approved, the company's finance department will issue a purchase order and send it to the chosen vendor. A purchase order will list the company's name and address (as well as other relevant contact information), the vendor's name and address, the date, the names of the person requesting and approving the purchase, a list of the items to be purchased with their prices and desired quantities, an order total, and any relevant notes. In our scenario, the only item on the list will be one new piece of software for the price offered.
The vendor will process the purchase order and send an invoice to the finance department for the amount owed. Someone in the finance department will make sure that the total on the invoice matches that on the purchase order (and contact the vendor if there are discrepancies). Then the finance department will issue payment.
At this point, the vendor will send out the items requested. It will include a packing slip with the order that shows all the items sent. The receiver should check to make sure everything requested is on the list and in the shipment (or if not, determine if there is a second shipment or an error). The receiver should also make sure that the goods purchased are not damaged in some way. If there is an error of some sort, either the receiver or a member of the finance department (your procedure document should indicate which) should contact the vendor for further information. Note that sometimes payment will take place after the goods are shipped and arrive.
The finance department will also receive a payment receipt showing that the vendor has received payment for each of the items requested. This receipt should be examined carefully by someone in the finance department who will check to see if the total on the purchase order and invoice matches that on the receipt (or if not, figure out why not).
It is extremely important for a company to follow a purchasing procedure so that department and company heads may approve all purchases according to the company's budget and so that the finance department can easily keep track of all the outgoing funds. Otherwise, the company might lose more money than it makes or even fall prey to unscrupulous employees who purchase more than they need or even purchase personal items using company funds. Record keeping must be meticulous for tax purposes as well.