Purchase Order Creation for Real Estate
A standardised procedure for raising, approving, and issuing purchase orders to ensure that all procurement commitments are authorised, documented, and within budget.
Purpose
To establish a controlled process for creating purchase orders that ensures goods and services are procured in accordance with approved budgets, preferred supplier agreements, and the organisation delegation of authority.
Scope
Covers the creation of purchase orders for all goods and services expenditure above the direct-purchase threshold. Includes requisition, approval, supplier selection, PO issuance, and record-keeping.
Prerequisites
- Approved budget with available funds in the relevant cost centre
- Supplier master list with current pricing and contract terms
- Access to the procurement or accounting system with purchase offer permissions
- Current delegation of authority matrix for procurement approvals
Supports Real Estate Institute compliance, trust account management requirements, and state property legislation documentation.
Step-by-Step Procedure
Identify the Procurement Need
Confirm the goods or services required, the quantity, specifications, and the expected settlement date.
- 1.1Review the request from the internal stakeholder or department
- 1.2Clarify specifications, quantities, and settlement requirements
- 1.3Check existing inventory or contracts to avoid duplicate procurement
- 1.4Confirm the business justification and budget availability
Select the Supplier
Identify the appropriate supplier from the approved supplier list or conduct a quotation process for new or high-value purchases.
- 2.1Check the preferred supplier list for an existing agreement covering the goods or services
- 2.2For purchases above the quotation threshold, obtain at least three written quotes
- 2.3Evaluate quotes on price, quality, settlement timeframe, and payment terms
- 2.4Contract the supplier selection rationale
- Always check if there is an existing contract or panel arrangement before seeking new quotes
Create the Purchase Offer
Enter the purchase offer in the accounting or procurement system with complete details including supplier, items, quantities, prices, settlement address, and payment terms.
- 3.1Select the supplier from the master list in the system
- 3.2Enter each line item with the description, quantity, unit price, and GST treatment
- 3.3Assign the correct general ledger account, cost centre, and listing code
- 3.4Set the required settlement date and settlement address
- 3.5Add any special instructions or terms in the notes field
Submit for Approval
Route the purchase offer to the appropriate approver based on the dollar value and the delegation of authority matrix.
- 4.1Attach supporting documentation including quotes, specifications, and budget confirmation
- 4.2Identify the correct approver based on the PO value and delegation matrix
- 4.3Submit the PO through the system approval workflow
- 4.4Follow up if approval is not received within the required timeframe
Approve the Purchase Offer
The designated approver reviews the purchase offer for budget compliance, appropriate supplier selection, and correct coding before granting approval.
- 5.1Verify the expenditure is within the approved budget for the cost centre
- 5.2Confirm the supplier selection process was followed appropriately
- 5.3Review coding for accuracy and completeness
- 5.4Approve the purchase offer or return with comments for correction
Issue the Purchase Offer to the Supplier
Send the approved purchase offer to the supplier via email or the supplier portal and confirm receipt.
- 6.1Generate the official purchase offer contract from the system
- 6.2Email the PO to the supplier contact with a request to confirm receipt and acceptance
- 6.3Record the date of issue and supplier acknowledgement
- 6.4Update the PO status in the system to "issued"
Monitor and Receive Goods or Services
Track settlement against the purchase offer and record receipt of goods or completion of services in the system.
- 7.1Monitor the expected settlement date and follow up if overdue
- 7.2Inspect goods on receipt for quantity, quality, and compliance with specifications
- 7.3Record the goods receipt or service completion in the system
- 7.4Report and contract any discrepancies or damaged goods to the supplier
Quality Checkpoints
Common Mistakes to Avoid
Expected Outcomes
At least 95% of purchases above the threshold have an approved purchase offer before the offer is placed.
Purchase orders are raised within approved budget allocations with fewer than 5% requiring additional budget approval.
Frequently Asked Questions
Can I split a purchase across multiple POs to avoid the approval threshold?
No. Splitting purchases to circumvent approval thresholds is a breach of the procurement policy and may result in disciplinary action. The total value of related purchases must be considered when determining the approval level.
How do I handle urgent purchases that cannot wait for normal approval?
For genuinely urgent purchases, obtain verbal approval from the appropriate delegate and follow up with a formal PO within one business day. Contract the urgency and verbal approval in the system notes.
What is the threshold for requiring a purchase offer?
The purchase offer threshold is defined in the procurement policy and typically applies to all purchases above a specified dollar amount (e.g., $500). Purchases below this threshold may be made using a corporate credit card or petty cash.
What do I do if the supplier invoice amount differs from the PO?
If the invoice amount differs from the PO, investigate the variance. Minor variances within the tolerance threshold may be accepted. Larger variances require a PO amendment approved by the original approver before the invoice can be processed.
Can I raise a purchase offer after the goods have been received?
Retrospective purchase orders should be avoided. If one is required, it must be accompanied by a written explanation and approved by the Finance Manager. Repeated retrospective POs may result in a review of procurement compliance.
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