There are five major steps in the expenditure process:

1. Approve Purchase Requisition

2. Send Purchase Order

3. Ensure Proper Receipt of Goods

4. Compare Purchase Order, Receiving Report, and Invoice (Voucher Package)

5. Make Payment

Firstly, in the expenditure process, we need an approved purchase requisition, which is a request to purchase goods. Once there is a need in the company, we create a purchase requisition, which then requires the appropriate level of management’s approval. After approval, we can proceed to order the goods and issue a purchase order to the vendor. Following the order, we need to confirm that we receive the goods we ordered.

At this point, we compare the purchase order, the receiving report, and the invoice. These three documents together form the voucher package. The purchase order indicates what we ordered, the receiving report confirms what we received, and the invoice presents what we have been billed for. If all three of these align, then we can make the payment.

The purchase requisition form is a request to purchase goods. This needs approval before we can generate a purchase order. It details the number of goods we’re aiming to order, the price we paid the last time we ordered them, and it requires proper approval signatures at the bottom of the document.

After approval, we transition to the purchase order. The next document called a receiving report, confirms that we received what we ordered, including the correct quantity. This receiving report states what we received, allowing us to compare it to our purchase order to confirm alignment.

Before we pay the vendor for what they shipped to us, we review the voucher package.

The voucher package is a combination of three documents: the purchase order, the receiving report, and the sales invoice. The goal is to ensure that what we ordered aligns with what we received and that what we received matches what we were billed for.

Study Tip: The voucher package consists of three documents: the purchase order, the receiving report, and the sales invoice.

Finally, when we’re ready to pay the invoice, we use the remittance advice. The remittance advice explains why we’re paying what we’re paying – what invoices we are settling, and it accompanies the check. As we remit the check, we send along the remittance advice. For instance, we could be making a payment for two specific invoices.