The Ultimate Guide to Understanding the Purchase Flow Process in Retailgraph

Purchase Flow Process Simply Explained

Understanding Purchase Flow in Retail & Distribution Business


Understanding Purchase Flow Process

The below flow chart is designed to help in understanding the process/ flow which is generally being followed during the buying/ selling of goods/services between the user and its customer.




This flowchart shows the key documents required to complete the cycle of purchase/sale of any material between a supplier and its customer.
  1. The customer places its order through a Purchase order or Oder Book to the Supplier (once the price and quantity have been finalized between both entities).
  2. On receiving the PO, the supplier prepares the product or, if already present in the inventory, dispatch the products.
  3. Once the material is received by the customer, it is checked and verified against the purchase invoice and is added to the inventory of the customer.
  4. Inside the store inspection is done, and on finding any damaged/ expired material is sent back to the supplier with the debit note.
  5. Again, when the customer’s inventory is low, reordered through the Order book & Purchase order, if the material is to be bought through the same supplier, else the above same process is followed with the other supplier.

Now, how to optimize Purchase flow using RetailGraph software:

The right software can make a world of difference in your purchase flow by giving you real-time inventory visibility and letting you automate certain functions. Here are some of the RetailGraph software features that you can use to optimize your purchase flow. Below are the steps of the purchasing process:

Order Book: Helps to keep track of Items to Reorder later

  1. An order book is a list of buy and sell orders for a specific financial instrument.
  2. It provides real-time information on the supply and demand for the asset.
  3. Investors and traders use the order book to make informed decisions on buying or selling.
  4. The order book shows currently open and available orders in the market.
  5. It helps determine the best time and price to execute a trade.


Inventory Re-order: Helps to maintain the Inventory Levels

  1. Re-ordering ensures enough inventory to meet demand and avoid stockouts.
  2. Steps include determining order quantity, selecting a supplier, and placing the order.
  3. Re-order frequency depends on Sales rate, delivery lead time, and inventory levels.
  4. Insufficient inventory can lead to lost sales and negative consequences.
  5. The goal is to maintain a balance between inventory and capital.


Purchase Order (PO): Document created by a buyer and presented to a seller

  1. A purchase order is generated and sent to the supplier, specifying the details of the order, such as the inventory items, quantity, price, and delivery date.
  2. Purchase orders streamline the purchasing process, facilitate efficient communication, and help maintain accurate records of business transactions between buyers and sellers.

To know more, click here: How to create a Purchase Order in retailGrap?

Purchase Invoice: Establishes a healthy buyer-seller relationship

  1. Purchase invoice creation is when the supplier generates an invoice to bill the customer for goods or services purchased.
  2. The invoice serves as a record of the transaction, including details like purchase date, supplier and customer information, quantity, unit price, and total amount due.
  3. The supplier creates and sends the invoice to the customer, requesting payment.
  4. The invoice provides clear information about the amount owed, payment terms, and due date.
  5. It helps the customer understand and fulfil their payment obligations.


Purchase Return Invoice: The buyer acquired the wrong goods

  1. A purchase return invoice, also known as a supplier return or debit note, is issued by a customer to inform the supplier about returning goods previously purchased.
  2. It serves as a record of the transaction and includes details such as return date, supplier and customer information, description of the returned goods, quantity, unit price, and total amount to be credited or refunded.
  3. The customer initiates the purchase return invoice when the received goods are damaged, defective, or don't meet the agreed specifications.
  4. It helps ensure proper documentation and facilitates the process of receiving credit or a refund from the supplier.


Purchase Debit Note: To request a return of funds due to incorrect or damaged goods

  1. A purchase debit note also called a debit memorandum, is used in accounting to reduce a vendor's invoice amount due to reasons like returned goods, damaged products, or pricing errors.
  2. It is issued by the purchaser to inform the vendor of necessary adjustments to the invoice.

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