Purchasing: Where Money Slips Between Request and Payment

Purchasing: Where Money Slips Between Request and Payment

A supplier invoice lands on the finance desk, and before paying it the accountant asks four simple questions. Who asked for this purchase? Who approved it? What price did we agree? Did all of it arrive? Every answer exists, just not in one place. The request is in a WhatsApp thread between the site engineer and the purchasing officer, the approval is a signed sheet in a drawer, the price is in one person's spreadsheet, and the receipt is a delivery note someone signed at the gate. So the accountant starts a round of phone calls, or pays on trust because the supplier is waiting.

We open Digitizing Purchasing with that scene because it repeats in every company that buys every day: a contractor buying materials delivered to site, a factory buying raw materials and spare parts, a hotel or property operator buying maintenance services and consumables. The series starts once the need is known; we covered when to reorder and how much in reorder point and safety stock. Here we follow what happens next: the road from a purchase request to a supplier payment, and where money leaks along the way.

Seven stations, each with its usual break

Every purchase, however small, passes through seven stations. At each one there is a break that repeats until it becomes habit:

• Request: buying without a written request. The site supervisor needs rebar, or a hotel technician needs a part for an air conditioner, so they call the purchasing officer or the supplier directly. No document records who needed what, for which project and why, so there is nothing for the later documents to point back to.
• Approval: a verbal yes nobody can prove. The manager agreed on a call, in a voice note, or with a quick OK in a WhatsApp group. The approval was real, but it is tied to no specific request, and two months later nobody can prove exactly what was approved or for how much.
• Supplier and quote: a price that differs from the one agreed. The quote arrived as a photo in a chat, and the invoice came with a higher unit price or a delivery charge the quote never mentioned. Nobody spots the difference, because the quote is not beside the invoice when it gets checked.
• Purchase order: a commitment with no paper. The order went to the supplier by phone, or the purchase order was written after the invoice arrived, to cover it. A purchase order written after the invoice controls nothing: it copies the invoice instead of being the reference the invoice is measured against.
• Receiving: invoiced quantity above what arrived. The materials truck reaches the site just before sunset, or the factory's delivery arrives missing two line items, and someone signs the delivery note without counting. Then the invoice arrives for the full quantity. This is the first of the openings we described in the inventory accuracy gap: whatever enters unrecorded shows up later somewhere else.
• Invoice: missing details that weaken your VAT deduction. An invoice without the supplier's VAT number, or with a generic description that does not show the quantity and nature of the goods. The VAT Implementing Regulations list the details a tax invoice must carry, and make deducting input VAT conditional on holding evidence of the tax, although between businesses they allow a less detailed simplified invoice for a supply under 1,000 riyals. The invoice may also arrive weeks after delivery, because the deadline for issuing it is the 15th of the month after the month of supply, and by then nobody remembers what was actually received.
• Payment: one invoice paid twice. The supplier emailed the invoice, then sent a copy on WhatsApp, or claimed it again on the month-end statement, so it was paid once from the invoice and once from the statement. Nobody did anything wrong on purpose; nothing along the way flagged that this invoice had already been paid.

Notice that none of the seven is a question of honesty. The purchasing officer is hiding nothing and the site supervisor is not careless. Each of them uses the tool closest to hand to get today's work done, and WhatsApp and spreadsheets are excellent tools for that. The problem appears when they are used past their limit.

The problem is the design, not the people

Look at the seven stations from above and you find a single cause: each station keeps its own record. The requester has a chat, the approver has a memory, purchasing has an inbox, the site or warehouse has delivery notes, and finance has the accounting system. No single number links those records, so nobody sees the whole chain. The only person who tries to see it is the accountant, at the last station, when the money is about to leave.

It is the same pattern we described in where contracting and maintenance companies lose their profit: the leak does not come from one large error but from small gaps between steps owned by different people. A control that depends on someone remembering to issue the purchase order, count the delivery, or check that the invoice was not already paid will fail under daily pressure, however disciplined that person is. The fix is not asking people to pay more attention. It is making each document the condition for the next step: no purchase order without an approved request, and no payment without a receipt that matches the invoice.

What this costs you without you noticing

The cost of a broken cycle never appears as its own line in the income statement, so it looks free. It is paid in five places:

• A price above the one agreed. The difference is small on any one invoice, but it repeats, and nobody catches it because the comparison needs a document that is not there when the invoice is checked.
• Paying for what never arrived. The short quantity is paid in full, the unfinished service is paid as if it were finished, and recovering the difference later takes proof you do not have.
• Duplicate payments. The money has left, and getting it back depends first on someone noticing, then on the supplier's cooperation and the time of whoever chases it.
• Input VAT at risk. An incomplete invoice can weaken your right to deduct its VAT, and invoices and records must be kept for at least six years from the end of the tax period they relate to. An invoice that lives on an employee's phone may not be there when you need it.
• A longer month-end close and suppliers kept waiting. Finance spends closing days chasing documents, correct invoices wait because nobody confirms receipt, and payment to the supplier who delivered on time slips, which strains the relationship.

The Origami view

Purchasing runs through every sector we work in, from contracting and maintenance to industry and warehouses to real estate and hotels. Each time we start from one question: can you link an invoice, from one place, to its request, approval, order and receipt? Before we draw a single screen, we map the cycle the way it actually runs in the company: who requests, who approves, where goods are received, and who enters the invoice.

Then we build the purchasing workflow around that cycle: a request carrying a number every later document follows, an approval the system enforces according to the thresholds the owner sets, receiving recorded where it happens, and a supplier-invoice inbox that matches each invoice to its order and receipt before it reaches payment. All of it connects to your accounting system and e-invoicing instead of replacing them. That is what we mean by building custom systems as part of our services.

An exercise for this week: trace your last ten invoices

Before any system or tool, you need a number that shows the size of the problem. An operations or finance manager can run this in a week with no new tools:

• Take your last ten paid supplier invoices, and mix them as much as you can: materials, services, and an urgent purchase if there was one.
• For each invoice, look for four documents: the purchase request, its approval, the purchase order, and the receiving record or proof the service was delivered.
• Write down where you found each document: in the system, in email, on WhatsApp, on paper, or in the memory of someone you had to ask.
• Compare the price and quantity on the invoice with the purchase order and the receiving record, and note every difference, however small.
• Count how many invoices had all four documents in one place without asking anyone.

That count out of ten is the baseline every later improvement gets measured against. More useful still is your note of where each document was found, because it tells you which station breaks most often in your company. You will usually discover that most of the gap sits at one or two stations, and that is where you start.

In the parts ahead

The cycle is mapped and its breaks are named; what remains is fixing them one station at a time. The next part starts with the first document: the purchase request and the approval matrix, who approves what by amount and type of purchase, and how a system closes the workarounds around it. Then we move to turning a quote into a binding purchase order, then to receiving and three-way matching, then to what you check on a supplier invoice before deducting its VAT, then to scheduling payments and reconciling supplier statements, and we close the series with a full view of your spend and a ninety-day plan that puts all of it in order.

Sources

• VAT Implementing Regulations, Zakat, Tax and Customs Authority (official Arabic text) — Article 49(7) (evidence required to deduct input VAT), Article 53(1) and 53(5) (tax invoice issue deadline and required details), and Article 66(1) (keeping invoices and records for at least six years).
• VAT registration verification service, Zakat, Tax and Customs Authority — to confirm a supplier's registration before relying on its invoice.