Script COMAC

There are a number of technologies suitable for supporting activities within the expenditure
cycle and improving the overall functioning of the process. A range of inventory
management tools are available to help improve the ability to balance supply and demand
for goods and services. Transparency and management of cash payments and cash flows
can also be improved by the use of appropriate technologies.
Enterprise resource planning (ERP) A processed used by companies to manage and

integrate the important parts of their businesses, often via software to connect planning,
purchasing inventory, sales, marketing, finance, human resources and more.
The expenditure cycle can benefit greatly from technologies that provide an efficient means of
data exchange with suppliers of goods and services. Some of the ‘paperwork’ associated with
the expenditure cycle (e.g. purchase orders, purchase requisitions) originates in-house and is
sent outwards to customers, and the remainder is generated externally by suppliers (e.g. price
quotes, invoices, delivery dockets). Use of technologies such as electronic data interchange
(EDI) can provide accurate, timely and cost-effective data sharing.
The expenditure cycle involves many activities related to the physical handling and movement
of goods. Where volumes are sufficiently high to warrant the use of printed barcodes or radio
frequency identification (RFID) tags, hand-held scanning devices can cut stock handling and
recording costs and improve the accuracy and timeliness of inventory and expenditure data.
Specialized supply chain management software (SCM) can be used to improve both the
planning (identifying demand for products) and execution (receiving orders, routing goods)
of the supply chain by providing detailed supply chain analytics. SCM can be incorporated
as an integrated module within an existing ERP system, or acquired and operated
independently using a best-of-breed supplier such as Manhattan Associates or i2
Technologies.
The ability to make electronic payments provides a fast and comparatively inexpensive way
for organizations to settle their accounts with suppliers. When using electronic payment
facilities such as those provided by the major banks it is important to consider the timing
and cash flow implications. A payment made electronically will take funds from a company
bank account immediately, whereas a payment made via cheque may take up to ten
working days before any funds are withdrawn from the company account. In addition to
these payment timing issues, it is vital to consider and appropriately design access security
over online payment facilities.
Inventory data – expenditure cycle activities require access to data related to inventory to
help identify existing stock levels. In order to correctly identify how much to purchase it is
important to be familiar with both the current demand for the goods (which comes from the
sales process) and how much inventory is currently available for sale.
 Supplier data – the expenditure cycle requires access to data about suppliers, including
both basic name and address details and information about preferred suppliers,
including past performance.
 Purchase order data – records details of all open (incomplete) purchase orders,
including the current status of each of the items on the order
 Goods received data – lists items received from suppliers and typically updates the
inventory status of those goods. Goods received data are also used to verify invoice
validity during the accounts payable phase.
 Accounts payable data – both created and updated by activities within the
expenditure cycle; invoices received from suppliers are recorded in accounts payable, as
are details of payments made during the accounts payable phase. More detailed
information about payments made is recorded in the cash payments data store.
EVENTS
Example: Benjamin Controller is an employee at a large state university. He needs to
purchase a new computer, so he pulls up the purchase requisition form on the university’s
website and fills in the appropriate information. He sends the completed form to his
supervisor for approval, who approves the request and clicks the “Submit” button to forward
the request electronically to the purchasing department. A purchasing agent creates an
electronic purchase order based on the information provided. The agent consults the vendor
file to locate an authorized vendor for the requested computer. The AIS then sends an
electronic version of the order to the receiving department and another copy to the vendor.
When the computer arrives from the vendor, a receiving clerk consults the AIS system to
verify that a purchase order exists for the goods received. The clerk then enters information
about the receipt (e.g., date, time, count, and condition of merchandise) to create an
electronic receiving report. Upon receipt of an electronic vendor invoice and the receiving
report, the accounts payable system remits payment to the vendor.
The economic and business events in the university’s purchasing process are the purchase
request, purchase order, receipt of goods, and payment to the vendor. The university’s AIS
records information about each of these events and produces a variety of reports
The next two slides sections describe the information inputs and some of the reports
associated with the purchasing process.
INPUTS
As explained earlier, the purchasing process often begins with a requisition from a
production department for goods or services. Sometimes, an AIS triggers purchase orders
automatically when inventories fall below pre specified levels. The purchase requisition
shows the item(s) requested and may show the name of the vendor who supplies the
goods.
the accounts payable system matches three source documents before remitting payment to
the vendor: the purchase order, the receiving report, and the purchase invoice. A purchase
invoice is a copy of the vendor’s sales invoice. The purchasing organization receives this
copy as a bill for the goods or services purchased. The purpose of matching the purchase
order, receiving report, and purchase invoice is to maintain the best possible control over
cash payments to vendors. For example, the absence of one of these documents could
signify a duplicate payment. A computerized AIS can search more efficiently for duplicate
payments than a manual system.
OUTPUTS
Typical outputs of the purchasing process are vendor checks and accompanying check register,
discrepancy reports, and a cash requirements forecast. The check register lists all checks issued
for a particular period. Accounts payable typically processes checks in batches and produces the
check register as a by-product of this processing step. Discrepancy reports are necessary to note
any differences between quantities or amounts on the purchase order, the receiving report, and
the purchase invoice.

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There are a number of technologies suitable for supporting activities within the expenditure

Enterprise resource planning (ERP) A processed used by companies to manage and

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