Flow of financial docs
between businesses
Order of financial docs
1.
2.
3.
4.
5.
6.
7.
8.
9.

Purchase order
delivery note
Goods received note
Invoice
Credit note
Statement of account
Remittance advice slip
Cheque
receipt
Purchase order
If you place an order for a new office chair
then a purchase order would need to be
completed
I.e. purchase orders are made out when
one business orders from another
Purchase orders need to be checked for
accuracy
example
 Complete the purchase order with these details:
 you work for Mouse Matters
 You order 200 sq metres of blue mouse cloth, 20 m of
black mouse cloth and 50 m of 2mm vinyl sheet
 Item codes are MC03, MC04 and V07 respectively
 Prices are £5.50, £5.50 and £6.60 respectively
 Ordering from Universal Fabrics, 4-10 Dickenson St,
Battersea, London, SW11 ORT
 Order No is 2003/707
 Supplier No is 97
 Delivery is one week today
 I will sign as purchasing officer!!
questions
What happens if the following errors are
present?
1. The suppliers post code is wrong
2. Suppliers name and address is wrong
3. Description of material is right but code is
wrong
4. Price on the order is 2 less per item than
stated in supplier’s price list
5. The form is not signed
Delivery note
 Produced by suppliers of the goods and sent to
the business customer with the goods
 After goods arrive, a staff member checks them
and signs two copies of the delivery note
 One is kept and one returned to the supplier
 A signed delivery note means that everything is
in order and the invoice can be sent
 If a large business uses its own specialist
company to deliver goods the delivery note is
known as an advice note
example
You must now complete the delivery note
using the information from the purchase
order
Make sure you copy the order no correctly
Likewise the customer no and address
Also check item code and quantity
Goods received note
 Each time an order is unpacked and checked
 a goods received note is filled in as a double
check (may be because in first instance the
delivery note was signed by reception)
 records what was delivered, when and by whom
 Needed by accounts to check details on invoice
 If there any differences or discrepancies the
supplier is contacted immediately
exercise
1.
2.
3.
4.
5.
In groups of four discus the following and come
to a group decision:
What action would be taken if each of these
occurred:
Ten boxes of paper were crushed and
damaged in transit
Pink paper ordered instead of white
The order stated 50 folders but 500 were
delivered
Only 15 ink cartridges were delivered instead of
20
invoice
Sent form supplier to customer for
payment for goods which have been
delivered
Prices added together to give total amount
owing
VAT will be calculated and added
Obviously need to be checked for errors
example
Calculate the total invoice amount for
mouse matters from universal fabrics
given that VAT is 17.5%
Fill in the blank invoice provided
Credit note
Used if customer overcharged or if goods
are faulty
Also used if wrong goods sent or the
wrong amount sent
Sometimes more may have been ordered
than necessary. If the supplier agrees to
take these back then a credit note can be
used
Statement of account
Statements of account list or detail the
transactions between two companies
Usually sent out each month to all
customers who owe money
Three columns – the debit column shows
amounts owed by the customer, the credit
column shows amounts paid by the
customer, the running balance column is
calculated after each transaction
Remittance advice slip
Sent attached to the statement of account
Divided by a perforated line so can be
detached and sent back with cheque
Obviously details should be checked on
remittance advice with those on the
statement of account
Final details should be checked to tally
with cheque written
cheque
 Cheques are a convenient way of paying for
large business transactions
 Also more secure than large amounts of cash
 Complete the blank cheque for the amount
detailed on the statement of account for mouse
matters i.e. for £3453.40
 Common mistakes include: date incorrect, not
signed, difference between amount written in
words and numbers, alteration on cheque
 Minor alterations an be initialled
receipt
When cash is used a receipt will normally
be issued
Provides proof of purchase and allows for
staff reimbursement
Also provides details of VAT paid
Two copies issued – one to customer, the
other retained but the business
Contains date, ref no, amount paid for
each good, total and VAT added.
Computerised systems: advantages
 Quick – instant in most cases
 Automatic
 Fewer mistakes
 Can chase up unpaid bills more easily
 No docs to lose
 Linked to other systems
 Can search customers easily
 Account nos allocated automatically
 More secure?
Computerised systems: disadvantages
Cost – can be expensive
Input of data
Staff training
Hardware/computer failure
Input errors – can be difficult to spot
Can be inflexible