Purchase Policy for [Startup Name]
1. Purpose
This policy provides a structured framework for the procurement of goods and services. It ensures:
- Efficient use of company resources
- Transparency and accountability
- Compliance with legal and financial standards
- Prevention of fraud and conflicts of interest
2. Scope
This policy applies to:
- All employees, contractors, and consultants
- All departments and business units
- All purchases made using company funds, including petty cash, credit cards, and reimbursements
3. Definitions
- Purchase Request (PR): A formal request to procure goods or services.
- Purchase Order (PO): A document issued to a vendor confirming the purchase.
- Vendor: Any external party providing goods or services.
- CapEx: Capital Expenditures (e.g., equipment, infrastructure).
- OpEx: Operational Expenditures (e.g., subscriptions, office supplies).
4. Roles and Responsibilities
Role Responsibility
Employee Initiates PR with justification
Department Head Reviews and approves PRs within budget
Finance Team Verifies budget, processes payments, maintains records
Procurement Officer/Admin Issues POs, manages vendor relationships
CEO/COO Approves high-value or strategic purchases
5. Purchase Authorization Matrix
Purchase Amount Required Approvals
■0 – ■10,000 Department Head
■10,001 – ■50,000 Department Head + Finance
■50,001 – ■2,00,000 Finance + CEO/COO
> ■2,00,000 Board-level or Executive Committee approval
6. Procurement Process
6.1. Initiation
- Submit a Purchase Request Form via [Tool/Platform].
- Include:
- Description of item/service
- Quantity and estimated cost
- Business justification
- Preferred vendor (if any)
- Timeline for delivery
6.2. Vendor Selection
- Minimum of 2 quotations for purchases > ■10,000
- 3 quotations for purchases > ■50,000
- Evaluate based on:
- Price
- Quality
- Delivery time
- Vendor reputation
- Warranty/Support
6.3. Purchase Order (PO)
- Issued only after approval of PR
- Must include:
- PO number
- Vendor details
- Itemized list
- Delivery terms
- Payment terms
- No purchase should be made without a PO unless pre-approved as an exception
7. Receiving and Inspection
- Goods/services must be inspected within 2 business days of receipt
- Report discrepancies or damages to Procurement and Finance
- Maintain Goods Received Note (GRN) or service completion report
8. Payment Process
- Vendor submits invoice referencing PO number
- Finance verifies:
- PO match
- GRN or service confirmation
- Budget availability
- Payments processed within 15–30 days of invoice approval
9. Emergency Purchases
- Allowed only in urgent, business-critical situations
- Must be documented and approved retroactively within 48 hours
10. Petty Cash and Reimbursements
- Petty cash limit: ■2,000 per transaction
- Reimbursement claims must include:
- Original receipts
- Purpose of expense
- Approval from Department Head
11. Use of Company Credit Cards
- Issued to authorized personnel only
- Monthly reconciliation required
- Misuse may result in disciplinary action
12. Conflict of Interest
- Employees must disclose any personal or financial interest in vendors
- Avoid favoritism or biased vendor selection
13. Record Retention
- Maintain all procurement records (PRs, POs, invoices, GRNs) for minimum 5 years
- Store digitally in secure, auditable systems
14. Policy Violations
- Non-compliance may result in:
- Rejection of reimbursement
- Disciplinary action
- Legal consequences in case of fraud
15. Policy Review
- Reviewed annually by the Finance and Operations team
- Updates approved by the CEO or Board
Sample Purchase Request Form
Purchase Request Form
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Date: [Insert Date]
Requested By: [Employee Name]
Department: [Department Name]
Item/Service Description: [Description]
Quantity: [Quantity]
Estimated Cost: [Cost]
Business Justification: [Justification]
Preferred Vendor: [Vendor Name]
Timeline for Delivery: [Delivery Timeline]
Approval:
- Department Head: [Signature]
- Finance: [Signature]
- CEO/COO: [Signature]
Sample Purchase Order
Purchase Order
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PO Number: [PO Number]
Date: [Insert Date]
Vendor: [Vendor Name]
Itemized List:
- Item 1: [Description, Quantity, Cost]
- Item 2: [Description, Quantity, Cost]
Delivery Terms: [Delivery Terms]
Payment Terms: [Payment Terms]
Authorized By:
- Procurement Officer/Admin: [Signature]
- Department Head: [Signature]
- Finance: [Signature]
- CEO/COO: [Signature]
