We at B&J Bookkeeping are always looking to help our small business clients make their lives more easy. One such headache often involves purchases and all the paperwork that goes into them. To help out, we will show you how to use the 3 way match method to stay on top of them.
Step One: The Purchase Order
All of your business’s purchases must be approved and filed appropriately, especially when filing your taxes. As a result, the first step to any purchase should be the purchase order. This is the stage where you justify the purchase and approve it. You may also include a purchase amount, place to purchase, and other details. We recommend doing this for each purchase from the morning coffee to expensive pieces of equipment. All documentation should have:
- Reference number for use down the 3 way method.
- Date of purchase invoice.
- Description of item or items – even if it’s just “office supplies.”
- Quantity of items to be purchased.
- Allotted budget of items to be purchased.
- Department and name of worker in charge of purchase.
- If you really want to make your bookkeeper happy, you should also describe the purpose of the purchase.
Step Two: Collect the Invoice or Receipt
Each purchase should be accompanied by the invoice or receipt of said purchase. Using the morning coffee as an example, the receipt from the store purchased would count. We recommend making a copy of the receipt and writing the reference number used in the above step. File the original in one area, and the copy with the purchase order. You should also add the purchase to any spreadsheets you use for expenses.
Step Three: The Shipping Receipt, Packing Slip, Bill of Sale, or Other Proof of Delivery
This step is essential for items that are purchased at one time and delivered at another. For example, this includes shipped items, custom items, and even contractor work. This documentation shows that the item was delivered, as well as when. As above, make a copy and file it with the original purchase order, invoice, and added to a spreadsheet. You should also make a note of any warranty information or money back guarantees, should they be applicable. Finally, if payment is issued after delivery, make note of when the vendor cashes in the payment.
Benefits of the 3 Way Method for Bookkeeping
We have found this method carries many benefits that justify the time you put into it. For example, this process makes it highly difficult to impossible to approve of and pay for any fraudulent purposes. The system can also make doing business easier if a problem ever arises with a vendor or a good or service they have delivered. Best of all, this system is one of the best methods of protection should your business ever be audited.
Get the 3 Way Method for Small Business in Houston with B&J Services
Finally, we are focused on helping your Houston-based small to mid-sized business use this and other advanced bookkeeping techniques to make the most of your time and money. Our bookkeeping services are fairly priced, professional, and help you properly perform any purchases you need. Feel free to contact our office to learn more on how we can help with all bookkeeping needs.