From material request to paid bill: never pay for material that didn't arrive

Construction purchasing works best in six steps: the site asks for material, a manager approves, purchasing orders it, the site receives and counts it, the supplier's bill is checked against what arrived, and only then is it paid. That check before payment, comparing order, receipt and bill, is often called a three-way match. It is what stops you paying for material that never arrived.

Where the money leaks

The leaks are small and they add up: orders placed by phone with no written order, bills paid from the supplier's statement, short deliveries billed in full, a price on the bill higher than the price on the order, and the same bill paid twice. None of them needs bad intent; each needs only one missing step.

The six steps

1. Request. The site engineer asks for material: what, how much, for which site and by when. For example, 1,200 blocks for Tower A by Sunday.
2. Approval. A manager checks the request against the work planned and approves it. Without approval, anyone can buy anything.
3. Order. Purchasing asks two or three suppliers for prices when the amount is worth it, then sends one written order: items, quantities, prices and the delivery site. Everything that follows is checked against this order.
4. Receipt. The site counts at the gate and records what actually arrived, against the order. If 400 bags were ordered and 380 came, the receipt says 380. Damaged items are refused or sent back, and the return is recorded.
5. Bill. The supplier's bill is matched before it is posted: the same items, the same prices as the order, the same quantities as the receipt.
6. Payment. Bills that match are paid on their due date. A list of what falls due this week, and of what is already late, keeps suppliers content without paying anyone early.

The match in one table

Returns and credit notes

Material that goes back to the supplier is recorded against the receipt it came on, so the site's stock goes down at once. The supplier then issues a credit note, which is matched just like a bill: 60 blocks returned at 9.50 means a credit note for 570.

Who does what

The site asks, a manager approves, purchasing orders, the storekeeper receives, and finance matches and pays. In a small company one person may do two of these, but never let one person order, receive and pay: that is where money disappears without anyone noticing.

Common mistakes

• Paying from the supplier's statement instead of from matched bills.
• Ordering by phone, so there is nothing to match the bill against.
• Entering receipts from the delivery note without counting.
• Paying early because the bill arrived, not because it is due.

How Sitely does it

In Sitely each step is a record linked to the one before it: the site's material request, the request for quotation, the purchase order, the receipt at the site, the bill and the payment. A bill whose quantities differ from what the site received cannot be posted, so a short delivery is never paid in full. Returns go back against their receipt, and the credit note follows.

Everyone's Home page shows what is waiting for them: requests to approve, quotations to confirm, receipts expected, receipts not yet billed, and bills to pay, with those past due counted apart.

See the whole flow on How it works, or run it with your own suppliers in a free 15-day trial.

Questions people ask

What is a three-way match?

Checking a supplier's bill against your order and against what you received before paying it. All three must agree on items, quantities and prices.

What if the supplier delivers more than we ordered?

Decide at the gate: refuse the extra, or have the person who approves orders increase the order first, so the bill can still match.

Must every small purchase go through all six steps?

No. Give each site a small cash float for petty items, with receipts handed in every week; everything above that limit follows the six steps.