Procurement SOP (Free PDF Download)

Procurement Standard Operating Procedure (Free PDF Download)

A complete, ready-to-customize standard operating procedure template for organizational purchasing at [Company Name] — covering purchase requisitions, vendor selection and approval, quotations, purchase orders with an approval authority matrix, goods receiving and inspection, and invoice matching and payment. Adapt the bracketed fields and adopt it as your procurement procedure.

1. Purpose

To ensure every purchase at [Company Name] is properly authorized, competitively sourced, correctly received and accurately paid — achieving value for money while preventing fraud, duplication and maverick spending.

2. Scope

Applies to all employees who request, approve, receive or pay for goods and services at [Company Name]. Covers all purchases except those governed by a separate policy (for example payroll or intercompany charges); confirm exclusions with your finance team.

3. Background and Standards

• Competitive sourcing protects the organization: written quotations are required above defined thresholds, and single-source purchases need documented justification.
• Quotation and approval thresholds in this template are placeholders — set the actual limits in your organization's financial policy and record them in section 5.4 before use.
• Segregation of duties is mandatory: the person requesting a purchase must not be the sole approver, receiver and payer.

4. Responsibilities

5. Procedure

5.1 Purchase requisition

1. The requester completes a purchase requisition form: item description and specifications, quantity, required delivery date, budget code and business justification.
2. Attach supporting documents (quotes already obtained, contracts, technical evaluations) and submit to the department head.
3. No commitment may be made to a vendor before the requisition is approved and a purchase order issued.

5.2 Vendor selection and approval

1. Source vendors from the approved vendor list where one exists; new vendors must complete the vendor onboarding form (business registration, tax details, bank details, references).
2. Evaluate vendors on price, quality, delivery capability and past performance; document the evaluation for purchases above [Quotation Threshold].
3. The procurement officer approves additions to the vendor list; remove underperforming vendors after documented review.

5.3 Quotations

1. Obtain written quotations per your thresholds: a minimum of three written quotes is standard practice for purchases above [Quotation Threshold] — confirm the exact thresholds in your financial policy.
2. For single or sole-source purchases, attach a written justification explaining why competition was not possible, approved at the next higher authority level.
3. Evaluate quotes on total cost (including delivery, taxes and installation), not headline price alone; keep all quotes on file with the requisition.

5.4 Purchase orders and approval authority matrix

1. The procurement officer raises a purchase order referencing the approved requisition and accepted quotation; the PO states items, quantities, agreed prices, delivery terms and payment terms.
2. No order is sent to the vendor until it carries the approvals in the matrix below.
3. Amendments to an issued PO (price, quantity, scope) require re-approval at the authority level of the revised total.

4. Replace $[Limit 1], $[Limit 2] and $[Limit 3] with your organization's actual thresholds before adopting this SOP.

5.5 Goods receiving and inspection

1. Receiving staff check deliveries against the purchase order: quantities, specifications and visible condition; note any discrepancy on the delivery note before signing.
2. Raise a goods received note (GRN) in the system for every delivery; attach it to the PO file.
3. Reject or quarantine damaged or incorrect goods immediately and notify the procurement officer, who follows up with the vendor; do not accept partial deliveries without written agreement.

5.6 Invoice matching and payment

1. Finance performs three-way matching before payment: purchase order, goods received note and supplier invoice must agree on items, quantities and prices.
2. Resolve discrepancies with the vendor or requester before approving payment; never pay an unmatched invoice.
3. Process payment per the agreed payment terms; file the matched set (requisition, quotes, PO, GRN, invoice, proof of payment) for audit.

6. Pro Tips

• No PO, no pay. Making the purchase order the single gate for spending kills most maverick purchasing overnight.
• Total cost beats headline price. A cheap quote with slow delivery and no warranty is expensive; evaluate delivery, taxes, installation and support.
• Keep the vendor list alive. Review it annually — dormant or underperforming vendors quietly inflate your costs.
• Document sole-source decisions. The justification you write today is the audit evidence you need next year.
• Match before you pay. Three-way matching catches the duplicate invoice, the short delivery and the price creep before money leaves.

7. Frequently Asked Questions

Q1: What must a purchase requisition include? A: Item description and specifications, quantity, required delivery date, budget code, business justification and supporting documents — approved before any commitment is made to a vendor.

Q2: How are vendors selected and approved? A: From the approved vendor list where possible; new vendors complete onboarding with registration, tax and bank details, and are evaluated on price, quality, delivery and past performance by the procurement officer.

Q3: How many quotations are required? A: A minimum of three written quotes is standard practice above [Quotation Threshold]; single-source purchases need written justification approved at the next higher level — confirm exact thresholds in your financial policy.

Q4: Who can approve a purchase order? A: Approval follows the authority matrix in section 5.4: department head up to $[Limit 1], finance manager up to $[Limit 2], managing director up to $[Limit 3], and the board or tender committee above $[Limit 3] — set your actual limits before use.

Q5: What happens if delivered goods are wrong or damaged? A: Note the discrepancy on the delivery note before signing, reject or quarantine the goods, and notify the procurement officer immediately to follow up with the vendor.

Q6: What is three-way matching? A: Finance verifies that the purchase order, goods received note and supplier invoice agree on items, quantities and prices before any payment is approved — unmatched invoices are never paid.