Purchasing Cycle Definition

The purchasing cycle is the process that a company uses to buy goods or services. The cycle starts when a company needs to purchase something and ends when the payment is made. There are four main steps in the cycle: requisition, purchase order, receiving, and payment.

1. Requisition: The first step in the cycle is the requisition, which is when a company decides that it needs to purchase something. This can be because the company is running low on a certain item or because it needs a new piece of equipment.

2. Purchase Order: Once the decision has been made to purchase something, a purchase order is created. This is a document that states what is being bought, how much is being bought, and from whom it is being bought.

3. Receiving: The next step in the cycle is receiving, which is when the purchased goods or services are delivered to the company.

4. Payment: The final step in the cycle is payment, which is when the company pays for the goods or services that it has received.