The contracting process is a crucial part of procurement as it signifies the official start of the process. It is sequential steps that need to be carried out for an organisation while procuring goods and services. When the manager needs to sign the contract, the contracting process comes into the scenario. For better sustainability in the market contract procurement reflects a vital aspect, of any organisation.

Keep on reading the article for further information about the procurement and Contracting process…

 What is the importance of a Contract in procurement?

An organisation that can manage a better relationship with a supplier spontaneously unlocks a high-quality service. The contract gives you a route for ordering, collecting orders, evaluating invoices, and paying for goods and services. Contract procurement helps to attain the following goals: Detection of appropriate goods and services, creating and issuing the orders to purchase, ensuring delivery on time, payment approval, setting up meeting with suppliers along with the contract, settling the issues regarding the product, its delivery, and conflict among the management team, and checking whether all the demand of the contract is fulfilled.

Steps involved in creating procurement and contracting process:

1.Recognising the requirement for services and goods:

The procurement process starts when the organisation demand to accomplish the specific needs. The product, services, or technology are the requirement of the process, which needs to be completed accordingly.

2.Recognition and estimating the suppliers:

Once the requirement is addressed; it is time to know from where the trade of the product or services will be done. A complete supplier selection process will take place by comparing the quality, time, and cost provided by various vendors. The supplier who meets the requirement of the organisation in terms of various aspects will be finalised.

3.Negotiation of the contract terms:

Once the organisation picks a suitable supplier the contracting process legitimately begins. The contract procurement process includes estimating vital factors like the terms and conditions, the scope of work, pricing structure, and delivery timelines. Details about negotiation and analysis of contracts offer a chance for active cost savings and discounts.

4.Issuing a purchase demand and order.

The purchase demand carries a brief description of goods, services, or technology, supplier info, quantity, quality, and price of the product along with approval. It is the duty of the finance department to deal with the documentation work in terms of payment in this process.

5.Invoicing and Payment:

The organization will receive an invoice for the demanded goods or services by the supplier, which needs to be checked and verified before payment. The payment can be done pre- or post-delivery or as per the contract terms.

6.Inspecting the delivery:

The delivery is done as per the order and contract terms, but it is mandatory to check whether everything is accurate and meets the level of expectations.

7.Keeping a record of invoices:

Maintaining the record of the invoices is beneficial for future audits and records.

Hope so this article was productive and gave you a clear idea about the topic. Stay connected for more such articles.