Purchase processes -the reason why company processes do not fit self-employed
This week, I'm looking at the preconceived notion that a purchase process for a company fits a self-employed.
First, I'll look at why this happens, then I'll describe the purchase process that most of us know, the company process. Then I'll look at the self-employed purchase process and why it is very different. Finally, I'll summarise key takeaways.
Why do people tend to always think like a company?
My take on it is that it comes from two sources.
First, for most of us, our first business experience is as an employee in a company. For me, it was a summer internship in the local bank where I was born. I was supporting the team, which was controlling the customers signature on the large payment slips. The process was well defined. They taught me exactly what I had to do and who to ask if I was not sure. The process was very detailed with check and balances to make sure that no one could cheat the system. Managers had a complex process to make sure that I couldn't approve a large payment alone. This makes complete sense because if I would make an error, the bank would be responsible for it against the customer.
So we do believe the company processes are the right ones because that is the one we know and encounter in our professional lives.
Second, schools are teaching us what we should know from languages to mathematics, from physics to biology, from IT to accounting. If you have, like me, following an accounting class, the focus of schools is made on company processes. My opinion is that it is done because the company processes are way more complicated than one of a self-employed and accounting classes are also there to prepare the students for the work life.
School is teaching us more company processes.
Based on these two reasons, people tend to think that company processes are the right ones and that another way to do is wrong.
The company processes - what we all think is the "rule" but isn't.
Let's describe the "standard" purchase process by an SME in Switzerland, this is a generalization. If the process in your company is not exactly similar, this is more than possible. Please describe it in the commentaries below. I'll be sure to answer.
When someone wants to purchase something, it creates a purchase demand, which is an internal form where what needs to be purchased, why it is needed and how much it costs. This is an internal document sent to the manager.
The manager reviews the purchase demand. If the manager has the available budget, the amount is within its purchase limit and accept the purchase, he signs it. The approved purchased demand goes to the purchasing department. If the demand is not approved, it goes back to the person. If the amount is too high or the manager has no budget, usually the manager send it to his/her manager, etc...
Once the purchasing department receives the approved purchase demand, it starts asking for offers from different suppliers. It reviews the offers and makes a recommendation. The person who made the purchase order or her/his manager usually take the decision which option to purchase. The options should be within a specific range of the purchase demand.
The purchasing department orders then the goods or services.
Once delivery is done, the person who filled the purchased document or her/his manager fill a delivery note and send it to the purchasing team. In some companies, there are delivery teams who are doing this.
The delivered goods or services are checked against what was ordered and if everything matches, it goes to the payment department for payment. Once payment is done, it goes to the accounting department for bookkeeping and reporting. The process is done.
There are many advantages to such processes. One is that during every step of the process, someone is accountable for it. If something goes wrong, it is possible to find out who made a mistake and usually why. Another is that each employee only needs to know and master one part of the process.
Most of us do think of a process similar to this one when thinking of "purchase process".
The self-employed processes - quick tip - it's all about efficiency.
The self-employed has no manager. She/He is responsible from the beginning to the end. The process looks usually so.
- The self-employed want to buy something.
- She/He check the available money on the bank account (optional step)
- She/He asks for a couple of offers. (by phone or email)
- Once the offers are received, she/he decides to continue with which option or not.
- Once the order is made (by phone or email), the goods or services are delivered.
- The self-employed check the delivery, accept it or not, then make the payment based on the invoice.
The only person in the entire process is the self-employed. No need to double check who did what. The only required document for accounting in the invoice. Keeping a copy of the offers and orders are good ideas but not required for your accounting.
Key takeaways if you are a self-employed
Self-employed purchase process is very similar to the one we all do at home when purchasing something for us. The most important is the proof of payment on the bank statement. I don't know you but I'm making sure I keep the proof of payment if there is any warranty issue with what I purchased!
Compared to the company purchase process, the self-employed process is extremely slick, fast and uncomplicated.
Therefore, the software used by companies offer many functionalities to cater to all these needs. By using a company software when you are self-employed, you over-complicate how you work. This makes you lose time and money.
If you are self-employed, I recommend you to use dedicated software tailored to your needs and your way of working. Take a look for example at our accounting and invoicing solution dedicated for self-employed: EZYcount. If you want a demo, just take one with me here: Book a demo
If you have any questions, remarks or comments, please write them below. I'm interested to see if you also see that self-employed purchase processes are efficient! Also, if you want me to do the same for another business process, write it below.
Have a great week.
Vivien, CEO EZYcount