Purchase Approval Workflow: How the PR → PO → GRN Chain Stops Leakage

In most growing businesses, money leaks through purchasing: goods bought without approval, rates nobody compared, and bills paid for goods that never fully arrived. A simple approval chain closes most of these gaps without slowing your team down.

Where purchase money usually leaks

• Items bought on a phone call, with no written request or approval
• One preferred supplier used every time, with no comparison of rates
• Supplier bills paid for the ordered quantity, not the quantity received
• The same bill entered and paid twice
• Freight, duties and clearing charges left out of item cost, so margins look better than they are

The control chain, step by step

1. Purchase Requisition (PR) — the department says what it needs, how much, and by when. No prices are committed yet.
2. Approval — the right person approves the requisition, based on its value and department (see the approval limits below).
3. Request for Quotation (RFQ) — the requirement is sent to two or three suppliers.
4. Quotation comparison — rates, delivery time and payment terms are compared side by side, and the selected supplier is recorded with a reason.
5. Purchase Order (PO) — the committed order to the supplier, with agreed rates.
6. Goods Receipt Note (GRN) — the store records what actually arrived, with an optional quality check that accepts or rejects quantities.
7. Purchase invoice — the supplier's bill is entered against the PO and GRN.
8. Payment — made only for invoices that have passed the three-way match.

Three-way matching, with an example

Before any bill is paid, three documents must agree: the PO (what you agreed to buy), the GRN (what you actually received) and the invoice (what the supplier is charging).

Without matching, you would pay Rs 1,220,000. With matching, you pay for the 960 bags you received at the agreed Rs 1,200, which is Rs 1,152,000. The Rs 68,000 difference goes back to the supplier as a query instead of leaving your bank account.

Setting approval limits

Approval rules should depend on how much is being spent, so that small purchases move quickly and large ones get a senior review. A typical starting point:

Two rules make any approval chain stronger:

• Separation of duties — the person who raises a request should not approve it, and the person who receives goods should not enter or pay the bill.
• Delegation for absences — decide in advance who approves when an approver is on leave, so purchases are not held up.

Don't forget landed cost

For imported goods, the supplier's price is only part of the cost. Freight, insurance, customs duty, clearing and local transport should be added to the item's cost when it is received. Otherwise stock is valued too low and the profit on every sale is overstated.

Four numbers to track every month

• Purchases without a PO — should trend towards zero
• PR-to-PO time — if approvals take days, people will find ways around them
• Price variance — invoice rate compared with the PO rate, by supplier
• Receipt variance — GRN quantity compared with the PO quantity, by supplier

Doing it in BarkahSuite

BarkahSuite's Purchase module covers the whole chain: requisitions, approval strategies by amount and department, RFQs, quotation comparison, purchase orders, GRNs with quality checks, purchase invoices and landed cost. Approvals arrive in each approver's Inbox, and every posted document updates stock and the supplier ledger in real time. See the purchase & workflow features →

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