Purchasing

Practice groups will have ongoing purchases for items such as clinical and office supplies, as well as non-recurrent purchases for larger items including, equipment and furniture. Practices are eligible to receive disbursements and grants for most of the start-up office and clinical supplies and some ongoing purchases. All purchases should be included in the MPG’s budget. Recording and reviewing recurring purchases is useful to develop an accurate budget and identify key areas of expenditure.

Purchasing Best Practices

  • Practices may wish to develop purchasing policies and procedures, considering the following:
  • Before making a major purchase or settling on a regular supplier, ask another practice or community healthcare providers about their experiences. For recurring purchases, neighbouring practices may purchase items in bulk to obtain better pricing. Ask a supplier about their policies on shipping costs, returns, warranties and guarantees. Practices may also wish to consult the AOM’s affinity partners to reduce costs.
  • Obtain two or three quotes unless the purchase is for routine or recurring items. Set a dollar amount under which telephone quotes are acceptable; and ask for all others to be in writing.
  • Set a dollar amount under which the practice administrator can place orders without a partner’s signature.
  • To prevent fraud, any expenditure greater than a set dollar amount should be subject to prior approval of all partners, and a partner should sign off on the purchase order confirmation. Alternatively, purchasing management can be delegated to a staff responsible for ensuring purchases are within budget.
  • Assign a partner to review purchases on a weekly basis.
  • Ensure purchases of goods and services are contained in the approved working budget.
  • For purchases outside of the approved budget, a process should be implemented to review the practice’s budget– even in cases where emergency purchases have been made.  This will encourage prudent financial management and assist in fraud prevention.
  • File packing slips with the purchase order confirmation in a purchasing binder until the invoice is received.  Attach the invoice when received and forward to the person who manages the accounts payable.

Petty Cash

A petty cash fund can be set-up to pay for minor office supplies and other smaller items when a cheque is not practical. Consider the following:

  • Obtain a lock box to store petty cash; keep box in a lockable cabinet in the office, with limited access to keys or combination.
  • To establish the petty cash system, assign a custodian (e.g., administrator) to be responsible for disbursing funds in return for receipts, replenishing funds in the box as needed, and maintaining a record of items purchased or paid for with petty cash funds.
  • Determine an appropriate petty cash balance; write a cheque to the custodian from the practice’s bank account for the amount of the petty cash fund (e.g., $200.00).  Cash the cheque and keep the money in the lockable box.
  • Use the petty cash fund for purchases up to a designated maximum amount, transactions above this limit should be processed through the accounts payable system. Retain receipts for purchases of goods and services.
  • If petty cash is used towards a purchase with no receipt (e.g. bus fare), write a slip to account for the purchase and store the slip in the petty cash box.
  • If petty cash is pre-approved for withdrawal in advance of a purchase, log the details of the intended transaction and replace this log with a receipt and any surplus funds as soon as the transaction is completed.  
  • When requesting reimbursement, submit receipt(s) or slip(s) to the custodian to store in the petty cash box. At any time, the total of the receipts and cash in the box should total the original petty cash amount.
  • The custodian will reconcile the petty cash amount on a regular basis (e.g. once per month) or sooner if funds run low. Reconciliation should always occur prior to replenishing the fund. A practice partner will review the replenishment form and sign off on approval.
  • Once the reconciliation has been completed and approved, replenish the petty cash fund for the amounts paid out by writing a cheque to the custodian for the total of the receipts and slips in the box.

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Sample protocols, submitted by midwifery practices, are available on Equipment Purchase Replacement for practices to download and adapt. Be sure to tailor the template to reflect current evidence, best practices and practice group / community specific info before use.