STANDARD OPERATING PROCEDURE (Proposed)

PAKISTAN INTERLINING PROCESSING & INDUTRIES (PVT) LTD.

PURCHASE AND PAYMENT OF DYES & CHEMICALS

SOP No. Date:

Amendment Date:

SUMMARY

The purchase and payment procedure involves the following process;

i. Ordering of goods,
ii. Receiving of goods at gate,
iii. Receiving of goods at store,
iv. Return of good
v. Approval and payment of suppliers bills.

All this process requires following documents and record;

i. Purchase Order / Duplicate Book (Internal Demand Note) / Boiler Demand

ii. Gate Entry
iii. Inward Gate Pass
iv. Good Receipt Note
v. Delivery Order
vi. Goods Issue Slip
vii. Outward Gate Pass
viii. Stock Register
ix. Purchase Vouchers
x. Payment Vouchers
xi. Payment Slip
 ORDER

1. Purchase Order (PO) in triplicate is prepared by Purchase Department for purchase of dyes and / or
chemical.
Note;

a. Document is prepared and signed by Main storekeeper.

b. Document is approved by Managing director; or General Manager (in the absence of MD).
c. Distribution of copies is made accordingly, 1st copy: Supplier, 2nd copy: Accounts department, 3rd copy:
Main chemical store. (Note: Printed books of purchase order are duplicate and photocopy of it is provided to accounts
department)
d. Main storekeeper keeps the accounts departments copy in his custody until bill is received from
supplier and all the documents are complete.
e. Currently purchase is made by managing director itself, assisted by main storekeeper.
f. Mostly, the rate of purchase is not finalized at the time of preparation of PO. It is approved
subsequently when bill is received.

2. Demand in duplicate is prepared by Boiler department for purchase of boiler chemical.

Note;

a. Document prepared and signed by Boiler Incharge.

b. Document is approved by Managing director; or General Manager (in the absence of MD)
c. Distribution of copies is made accordingly, 1st copy: Administrative department, 2nd copy: Boiler
department.
d.

3. In case of goods required to be received from ABDULLAHPUR, Internal Demand note in duplicate
is prepared by main storekeeper.
Note;

a. Currently such document does not exist and required to be printed and an internal duplicate book is being
used which shall not be used after implementation of above mentioned document.
b. Document is / shall be prepared and signed by Main storekeeper.
c. Document is / shall be approved by Managing director; or General Manager (in the absence of MD).
d. Distribution of copies is / shall be made accordingly, 1 st copy: ABDULLAHPUR Gate, 2nd copy: Main
Chemical Store.

4. Purchase order, boiler demand or internal demand notes are forwarded to internal audit department by
main storekeeper or boiler incharge. Internal audit department sign and stamp each copy of all the
documents and return back to them.
 RECEIPT AT GATE

1. On receipt of goods at gate counting is made by gate keeper and security personnel. Gate Entry is
made at main gate by gate clerk, whether goods are received at any other gate.

2. Gatekeeper prepares Inward Gate Pass (IGP) in triplicate. Gatekeeper shall also collect delivery
challan / copy of builty and / or bill from supplier.
Note;

a. Document is prepared and signed by Gatekeeper and further signed by Main storekeeper (Boiler
incharge in case of boiler chemical) and Dyeing Incharge. (Note: In the absence of above mentioned signatories,
their assistant or persons holding authority next to them shall sign the document.)
b. Document is approved by Managing director; or General Manager (in the absence of MD).
c. Distribution of copies is made accordingly, 1st copy (Pink): Accounts department, 2nd copy (Green):
Main chemical store, 3rd copy (White): Gate
d. Main storekeeper keeps the accounts departments copy in his custody until bill is received from
supplier and all the documents are complete.
e. Delivery challan is not sent by all the parties.
f. When goods are received from ABDULLAHPUR, Outward gate pass of ABDULLAHPUR is received.

3. Gatekeeper mentions PO number or Demand number against which goods are received.

4. All copies of IGP and related documents are forwarded to internal audit department by gatekeeper.
Internal audit department sign and stamp each copy of all IGP and return back to gatekeeper.
 RECEIPT AT MAIN STORE

1. Goods are received at main chemical store by storekeeper. Storekeeper count and inspect the goods
and stack them properly in the godown. Dyeing incharge is also responsible for the inspection of
goods.
Note;

a. Lab test is not made at the time of receiving. Goods are entered in the stock on the basis of acceptance of
storekeeper and dyeing incharge. Subsequently, if goods are not of good quality as per lab report and / or
management decides to return the goods to the supplier, and then goods are returned.

2. Storekeeper prepares Goods Receipt Note (GRN) in duplicate.

Note;

a. Document is prepared and signed by Main storekeeper. (Note: In the absence of above mentioned signatories, their
assistant or persons holding authority next to them shall sign the document.)
b. Document is approved by Dyeing Incharge. (Note: In the absence of above mentioned signatories, their assistant or
persons holding authority next to them shall sign the document .)
c. Distribution of copies is made accordingly, 1st copy: Accounts department, 2nd copy: Main chemical
store.
d. Main storekeeper keeps the accounts departments copy in his custody until bill is received from
supplier and all the documents are complete.

3. Storekeeper mention on GRN, the PO, Demand or Internal demand note number against which goods
are received along with the IGP number.

4. All copies of GRN and related documents are forwarded to internal audit department by storekeeper.
Internal audit department sign and stamp each copy of all GRN and return back to storekeeper.

5. Storekeeper shall post entries in the inventory register after the audit of GRN.
 RETURN BY MAIN STORE

In case goods are found defective or of poor quality or management decide itself to return the goods to the
supplier, then:

1. The main storekeeper prepares and signs a Delivery Order (DO), (as an evidence of the order to
return the goods by authorized person), the two copies which are approved by Managing director or
General Manager (in the absence of MD). 1st copy is for Accounts department and 2nd copy is held by
Main chemical store. The delivery order shows the particulars of goods, quantity to be returned,
reason for return and the number of PO, IGP or GRN against which those goods were received
earlier.

2. Main storekeeper also prepare and signs Goods Issue Note (GIN), (as an evidence of goods being out
of the stock with the approval of dyeing Incharge and also as the receiving from the person collecting
the goods), the three copies of which are further signed by dyeing incharge. Also receiving from the
person collecting the goods is obtained on it. 1st copy is given to receiver, 2nd and 3rd copy are held by
Main chemical store. The Goods issue note shows the particulars of goods, quantity to be returned,
reason for return and the number of PO, IGP or GRN against which those goods were received
earlier. Goods are then moved out of the store.

3. The gatekeeper prepares and signs Outward Gate Pass (OGP), (as an evidence of goods have been
sent out of the factory premises), the three copies of which are further signed by main chemicals store
incharge and Dyeing incharge and approved by Managing director or General Manager (in the
absence of MD). 1st copy (Pink) is given to receiver, 2nd copy to Accounts department and 3rd copy is
held by Gatekeeper. The Outward Gate Pass shows the particulars of goods, quantity to be returned,
reason for return and the number of PO, IGP or GRN against which those goods were received
earlier.

4. All the above mentioned documents are forwarded to internal audit department by gatekeeper and
main storekeeper. After verification internal audit department sign and stamp all copies of above
mentioned documents and return back to gatekeeper and main store. Goods are then moved out of the
factory.
5. Storekeeper shall post entries in the inventory register after the audit of above mentioned documents.

6. Main storekeeper keeps the accounts departments copy in his custody until bill is received from
supplier and all the documents are complete.
 PAYMENT

1. When the bill is received, main storekeeper attach accounts department copies of PO, IGP, OGP (if
any) and GRN with the Supplier bill and forward the same to the accounts department.

2. The accounts department receives documents and sign on GRN. After checking that all the documents
are complete and correct, the same is forwarded to internal audit department for verification and
approval of the supplier bill by managing director.

3. The internal audit department verifies the document and check that original bill of the supplier is
attached with the bill. (Except in case of sales tax invoice which is sent to the head office and its
photocopy bill is approved).

4. The internal audit department gets the approval on bills from managing director. And returns the
same to the accounts department after signing and stamp the bill.

5. After receiving verified bill from internal audit department, accounts department post entry of
purchase in the ledger and affix the stamp of Posted on all the documents. And then confirm from
managing director about the amount of which payment slip is to be made.

6. Purchase voucher, payment voucher and Payment slip two copies are prepared and attached
accordingly and approved by managing director.

7. The purchase voucher and payment voucher is forwarded to internal audit department which sign and
stamp both the vouchers.

8. Issue slip is given to party when both vouchers are verified by internal audit department.
 IN CASE GOODS UNLOADED ABDULLAHPUR

There are situations when purchase order is made at dying unit but goods are unloaded at
ABDULLAHPUR area which is separately located at another distinct place. The issue is that as the main
store is located at dyeing unit, it has to account for those goods in its stock register but there is no inward
gate pass at dyeing unit. Also, accounts department has to account for the purchase of goods in the books
of accounts. If there is no IGP, no GRN, then purchase cannot be booked. There are following three
possibilities to solve this problem.

1. An IGP at dying unit is made (Based on the IGP of ABDULLAHPUR) and simultaneously an OGP is
also made of the same description and quantity. It shows that goods were received at dyeing unit and
was issued to ABDULLAHPUR on the same date (However, physically it was not happened). But
based on the IGP; GRN is made and on the basis of both the documents, purchase can be recorded.
The main storekeeper inspects stock at ABDULLAHPUR. The complete procedure of receipt and
issue is followed as mentioned above. (Whether the Delivery order should be prepared or not in this
case, is yet to be decided).
OR

2. Main storekeeper prepares GRN, on the basis of IGP of ABDULLAHPUR and obtains second copy
of IGP from ABDULLAHPUR. On the basis of those IGP and GRN, accounts department record
purchase in the books of accounts. In that there is no need to prepared IGP and OGP at dying unit.
OR

3. There is separate store at ABDULLAHPUR which maintains its own stock at ABDULLAHPUR.
That store prepares its own GRN and receives the bill and then all those documents are sent to
accounts department.