Purchase: A Perfect Guide of Purchasing, Features and It’s Types.

Definition of Purchase

Purchase is the action and effect of buying. This verb refers to obtaining something in exchange for money. For example: “I will have to wait to finalize the purchase of the car since the money is not enough for me”, “If I were rich, I would not hesitate to proceed with the purchase of a yacht to travel the world”, “With the purchase from a vacuum cleaner, we give you two tickets to the theater .”

The purchase necessarily implies another operation: the sale. These are different activities: who buys delivers money to receive a good or service, while who sells offers the good or service in exchange for money. This means that the buyer provides money to the seller and he does the same with the product.

Definition of Purchase

Arguably, the purchase is barter in which money is the medium of exchange. The seller “exchanges” his products to the buyer for money. If a trouser is priced at 200 pesos, the buyer must deliver that amount to the seller to take the product.

Currently, with the development and expansion of new technologies such as the Internet, there has been the birth of a new type of purchase. This is the so-called online purchase. This is based on web pages where anyone can find the product they need. Thus, once you find it, what you should do is proceed to acquire it through a process in which you account for your credit card information.

Very simple is this purchase process, which culminates when the consumer receives in his home the product that he has acquired through the Network.

The ease of acquiring products as well as the convenience of doing it from home is what has led to more and more people deciding to opt for online purchases, either to fill the refrigerator, to change clothes or to book tickets for any Cultural event type

All this situation has led to the companies’ websites not only offering that process of acquiring their items but also having specialized online stores. In particular, the establishments of the Network through which the desired clothing items can be obtained have increased considerably.

The purchase and sale occur in the area of the market, a social institution through which sellers ( suppliers ) and buyers ( applicants ) establish a business relationship to finalize the transaction.

The bidder participates in the market (either physical or virtual) from making its products available to potential buyers. The seller establishes a sale price, that is what the buyer must pay for the transaction to take place. If the buyer wishes to purchase the product and agrees with the price, he will pay the seller and make the purchase effective.

Let’s read something more interesting, below will try to differentiate between purchase order and purchase request.

Do You Know What is PURCHASE ORDER?

A purchase order or order note is a document that a buyer delivers to a seller to request specific merchandise. It details the quantity to buy, the type of product, the price, the payment terms and other relevant data for the commercial operation.

 What is PURCHASE ORDER

For example: “Juana, take Martinez’s purchase order and prepare the order that will be removed in an hour,” “A purchase order has just arrived for a value of 5,000 dollars”, “I do not understand what happened: in the company tells me they never received the purchase order. ”

In general, the purchase order mentions the place and date of issuance, the name and address of the buyer and the seller, tax information, details of the goods ordered, and conditions of payment and delivery. It is essential to clarify that this document is not valid as an invoice.

The purchase order has at least one duplicate since the original is delivered to the seller while the buyer keeps the copy. In this way, both have proof of the operation that will be carried out: the buyer, to show what merchandise he has requested, the seller, to prepare the order and start the billing process.

In short, it can be said that the purchase order is a written request for certain products at an agreed price and with certain payment and delivery conditions. This is an authorization that the buyer grants to be presented with an invoice for the purchase of the goods.

It is known as an open purchase order to the one whose validity lasts until its issuer expressly cancels it. It is worth mentioning that this may also occur for certain specific reasons, such as that the asset involved ceases to exist, or that it’s market price has exceeded a limit established at the beginning of the agreement. Using an open purchase order presents several advantages to merchants, some of which are explained below:

First, the purchase order makes it easier for employees to calculate the appropriate inventory levels, as well as helping them to detect more precisely the time at which a new supply order is necessary. On the buyer’s side, it allows you to keep a more efficient control of costs through the use of saving measures, such as an inventory of just-in-time type ;

Suppliers can know if competitors have equal opportunities in a business thanks to the realization of tenders. It is important to remember that the more competitive, the more convenient the prices for the buyer. Also, this opens the door to more strongly influence the negotiations, to obtain more favorable contracts for him;

    • Since the prices of an open purchase order remain stable for a certain time, it serves to combat potential inflation;
    • One of the fundamental points is the certainty that this type of order gives to suppliers and buyers about the cost of the services and goods involved. There are   many guarantees regarding the price, quantity, payment conditions and delivery requirements that generate peace of mind for both parties;
    • Assures providers that they will obtain a guaranteed income periodically;
    • When the order is of considerable magnitude, and the buyer is a prestigious company, the seller can use open purchase orders to create a line of credit;
    • Decreases the time needed to place orders, since the purchase process is codified in the open order, which allows buyers to use that time for other issues

Do You Know What is PURCHASE REQUEST?

The notion of the purchase request, therefore, refers to an order that someone makes intending to acquire a good. It is common for the concept to be used internally by a corporation when a specific sector asks the person responsible for purchases to purchase certain products.

PURCHASE REQUEST

Suppose that the Marketing Department of a company needs a new printer to develop its daily activities. Thus, the manager of said sector submits a purchase request to the Purchasing Department of the company, detailing the needs. The person in charge of the Purchasing Department, after analyzing the purchase request, proceeds to purchase the printer and deliver it to the Marketing Department.

As you can see, in this case, the purchase request is due to the internal operation of the company. If there is no Purchasing Department, the printer could have been acquired directly by the Marketing Department. In SMEs, usually, no purchase requests are used, since the owner instantly decides what to buy and when to do it.

For large companies, where there is an organization in different departments and a considerable number of employees, the purchase of supplies and materials is essential, since it ensures the continuous operation of each of its parts: sheets of paper, ink cartridges, spare parts For computers, new equipment to face an expansion of personnel, and cleaning supplies for bathrooms and the cleaning of offices are some of the many products that different components of a company can request daily.

Thanks to the implementation of a system based on the purchase request, the person in charge of contact with the outside for the acquisition of said goods can maintain order and avoid errors such as buying more or less. Also, if you have at your disposal a way to rank the orders according to your urgency, you can make sure that nobody spends a lot of time without the items you have required.

    • In addition to the advantages just exposed, the purchase request within the scope of a company allows grouping several similar orders to save time and money: it is known that many distributors offer discounts for large volumes , so it is always convenient to make the least amount of orders per month with the most significant possible number of units With respect to time, if several employees order the same type of item and the manager buys each of them separately, it will likely take much longer to complete their work than if they convert them into a single order.
    • Another benefit for the organization of a company is that it allows you to carry out more significant control over the relationships between your employees, since it forces them to comply with the submission of a form of which a record remains, instead of giving them the opportunity to order products in the middle of a conversation with the purchasing manager. If there is a delay in the provision of materials, for example, it is always possible to review the request to check its date and verify that it has been read, while if the communication were in the word there would be no evidence to resolve the conflict.
    • The purchase request, on the other hand, maybe an order placed by a customer or consumer. That would be the case of a firm that offers cosmetics through direct sales. The company has a website where interested parties can complete a purchase request: once this request is received, a commercial representative of the firm communicates with the customer to define the payment method and coordinate the delivery of the products.purchase

I hope our article helps you to know about purchase and its terms, and difference between purchase order and purchase request, let me know your thoughts and your ideas about the topic in the comment section below.

Thanks for reading.