Store is where you keep the goods of an organization. It could be commercial goods i.e. the goods you are selling to the public, it could also be consumables. What I mean by consumables is those items you buy – not to resell them, but to use them in the course of your business. For example, if you are manufacturing cement, petroleum is obviously not part of your ware. But you need to stock petroleum for your cars, generators and possibly your machines. This is an example of consumables. All these are kept in the stores.

If there is no proper control in the store, companies can lose a lot of money through pilferages, wrong handling of items, poor record keeping that results in colossal loss etc. That is why I am taking my time to explain the stores documentation to you.

I will group the stores documentation into three sections: the inward documentation, the outward documentation and the ledger or record. Let me explain them:

The Inward Documentation

The inward documentation means the documents or “papers” you will need to handle when goods are being brought into the stores. These include waybills, delivery notes and goods received notes (GRN). I have already explained the waybills and delivery notes in my previous post. If you miss them, please go back to them and read. In this post, I will explain the Goods Received Note.

The Outward Documentation

The outward documentation means the documents you handle when items are being removed from the store. These can include Stores Requisition Note (SRN), waybills etc. In this article, I will cover the Stores Requisition Note.

The Ledger

The ledger or record is the one that monitors the amount of goods or item that is remaining in the stores such that at any point in time, when someone visit the shop, he will be able to cross check and make sure that the items in the store has not been stolen or mis-appropriated.

Let me state here that poor store record keeping has spell doom for so many companies and send them to their early grave. That is why I am taking my time to explain to you in the most easiest and understanding manner.

Goods Received Note (GRN)

You remember I explained to you that when goods are delivered, they can come with either waybill or delivery note. Let us assume you are the store keeper, they will present their waybill or delivery note as the case may be to you for signature. This signature of yours is to confirm that you have received the goods that were stated in the paper you are signing. Therefore, before you sign, you must make sure that you have counted, inspected and satisfy yourself that what is written on the paper is what has actually been delivered to you.

A copy of such waybill and/or delivery note will be given to you to keep. A copy or copies will be taken away by the person who came to deliver the goods to you as evidence that he has done his job.

With this waybill – which I call inward waybill, you will prepare your own Goods Received Note. This GRN is the equivalent of the Official Receipts you issue when you collect cash or cheque from your customers. Since these are items of value – just like cash or cheque, you need to issue this document. However, you do not need to give the supplier of the good your GRN. Why? Because he or she has already gotten evidence of receipt by your signing his waybill or delivery note. Therefore, GRN is more of internal control documentation.

Then you may ask: Why don’t we just use the supplier’s waybill or delivery note as our own GRN? Well… some organizations do that. But the problem is that you will not be able to tract the completeness of your documents if you rely on the external one. For example, your GRN should be pre-numbered. Obviously there is no way  you will receive external waybills or delivery notes that are pre-numbered in the way that suits you. So what you do is to use the waybill or delivery note to prepare your own Goods Received Note. These documents will be distributed based on the policy of the organization. For example, you may need to send copies to the Accounts Department, Production Department, Logistic, etc.

Stores Requisition Note

When an item is to be taken out of the store, there must be a request which should be approved by the appropriate person with the right authority. The document with which request for item is to be taken out of the store is known as Stores Requisition Note (SRN). Other organization may call it other names. But the function is to ensure that every item that leaves the store is authorized. This is to prevent the store keeper from embezzling the items. So before releasing any item in his custody, the store keeper will demand for a requisition which he will file as evidence that he was authorized to give out the items.

Many organizations are not following this simple procedure. They simply go into the store, remove any item they want. When you ask for authorization, they ask you if they are not the owners of the goods. Why are you asking them to authorize what is their own. They failed to realize that it is not for them, but to preserve their own properties against theft and embezzlement.

Stores Ledger

The stores ledger is the document which monitors the balance of various items in the store. Some people call it Bin Card, Others call it Stock Card, Stock Ledger etc. The function of the Stores Ledger is to record the inward, the outward and the balance that remain in the store in the acceptable unit of measurement.

For example, let us go back to the hypothetical business of 200 bags of cement which you received. Having issued the GRN, you will “post” this GRN into the Store Ledger. You will enter the 200 bags of cement in the “In” section and the balance will also be calculated and posted in the proper section. A simplified example is shown below.

Your Company’s Name Address STORES LEDGER
Date	Particulars	Ref	In	Out	Bal
21-3-10	Bags of XYZ cement	001	200		200

This is an example of a stores Ledger. It shows that 200 bags of cement were received in the store and all the products were intact. So if you or anybody wants to check the stock, this ledger is the guide that shows how much is expected to be in the store. If the physical count of the product is done and you do not have the figure of 200, the store keeper will have to explain what has happened to it.

These are basically the documentation that a normal store keeper should keep in order to profitably operate his inventories.

Thank you and God bless.

In my previous post, I enumerated the pre-sale or pre-exchange documentations which included the enquiry form or letter, the reply to the enquiry which some people called proposal while others called it proforma invoice and the purchase order. Among these documents, the most important of them is the Purchase Order. Why is purchase order very important? Because it is the instruction of your customer to you to supply him goods and/or services. This is with an understanding that he is going to pay for it. It therefore, constitutes the commitment and the sealing of the contract. I called this pre-exchange or pre-sale because actual goods and services of value have not been exchanged.

But with the purchase order, you now have the authority to initiate the exchange of goods and/or services. Now, let us imagine that you are the one to supply the cement ordered. In other words, you have received an order to supply 200 bags of cement. What are you going to do?

For the purpose of making the process very simple for you to understand, I will ignore the stores internal documentation for now. We shall come back to it later.

Let us assume that you have loaded the 200 bags of cement in a truck. These 200 bags of cement are valuable because they cost you money to buy them into the store where you pick them up. Therefore you need to issue documents as evidences of the exchange that you are initiating.

Waybill

What document are you going to issue? You will issue a document called “Waybill.” I am sure you might have come across waybills before. You probably have given or received one in the past. The question is “What is a waybill?”

Let me explain to you by looking at the word “waybill.”  If you observe closely, you see that it is two words combined. These words are ‘way’ and ‘bill’.

‘Way’ can be described as a place for walking, travelling etc. It is a route or road through which human and goods are travelling from one place to another. On the other hand, ‘bill’ is a written statement of amount of money owed for goods and services. It is a written or printed statement. In other words, waybill is the written statement (or bill) of the quantity of goods being carried on the way.

The work of a waybill is to act as evidence that the goods being carried are authorized. It is evidence that the goods being carried were not stolen and that the driver or whoever is accompanying the goods has the permission of the owner to carry these goods on the way.

So, if a policeman stops the driver on the road and barked an order “Wey your particular?!” The waybill is the ‘particular’ the driver should show the policeman. Once this is done, barring any other issues, the policeman supposed to release the driver to go in peace.

Waybill will normally consist of the following:

1. The name and address of the supplier who owns the goods
2. The name and address of the customer to whom delivery is to be made
3. The date the goods were loaded to the truck
4. The quantity and description of the goods
5. The name of the driver authorized to carry the goods and his signature
6. The vehicle number and other necessary particulars with which he is carrying the goods
7. The waybill number

The above description refers to internal transactions. When it comes to international transaction, that is the business of import and export to other countries, waybill plays very significant roles.

An import/export waybill, also called consignment note is a document issued by a carrier – giving details and instructions relating to the shipment of a consignment of goods. Let me explain.

When you export goods, you do not follow the goods to the destination. Rather, you hand over the goods to a carrier – either the shipping company or an airfreight company. This carrier can also be referred to as the consignor. The carrier will give you a waybill as evidence that it has received your goods for onward transportation of the goods. Typically it will show the names of the consignor and consignee, the point of origin of the consignment, its destination, route, and method of shipment, and the amount charged for carriage.

Most Freight Forwarders and Trucking Companies use an in-house waybill called a House Bill. These typically contain ‘Conditions of Contract or Carriage’ terms on the back of the form. These terms cover limits to liability and other terms and conditions for carrying the goods.

Most Airlines use a form called Air Waybill which lists additional items like Airport of Destination, Flight number and time. A sample of Air waybill is shown herewith.

Digital waybill

With the advent of internet and increasing digital goods and services, a digital waybill is gradually being introduced. A digital waybill is an electronic version of a waybill, which has become very common as many shipments are ordered through the internet. The driving force behind the movement to the Digital Waybill has been the lowering of printing costs for shipping companies. This is referred to as an e-Waybill. However, this is not yet the industry standard as technology is still evolving.

Delivery Note

When the driver arrives at the premises of the customer – ready to deliver the goods, he is supposed to prepare another document called “Delivery Note” with which he will inform the customer that he has come to deliver the goods to him. The customer will check the physical goods delivered and compare it with what is written in the delivery note. After satisfying himself that the physical goods agree with the one written in the delivery note he will append his signature on the document as evidence that he has actually took delivery of the goods stated therein.

Because the details in the delivery note are more or less the same with that of the waybill, most organizations and individuals combined the two together. Some may call it waybill, while others call it delivery note. But strictly speaking, they are not the same. The waybill is the evidence that the driver or whoever accompanied the goods on the way is authorized to go with the goods, while delivery note is the evidence that a customer has taken delivery of the goods and/or services described therein.  With the signed delivery note, the driver will return to the supplier and handed him the signed delivery note as evidence of his mission accomplished. A sample of a Delivery Note is shown here.

What happens if there is discrepancy? For example, in our example, supposing when they counted the bags of cement supplied, only 195 bags were seen. In addition to the shortage, two bags were damaged while the delivery note is reading 200 bags. No problem! The customer may sign the deliver note subject to an exception report being written on it. In other words, the customer will note on the waybill or delivery note that there was a shortage of 5 bags and that two of the bags were also damaged. After that note, he or she will sign that delivery has been effected. Alternatively, he can issue a debit advice on his supplier indicating that the goods were damaged or short and that he was not going to pay for them.

The supplier will note these exception reports. If he or she has already written the invoice to the customer, he can then raise a credit note on him.

Oh! Are you asking what are invoice, debit note and credit note? Well, don’t worry. I’m going to explain everything to you what invoice and debit/credit notes are. But hold it! You have to be patient till when we meet again next time.

Till then, see you at the top.

Source documents or primary processing documents are documents that originate business or non-business transactions. It is the ‘evidence’ of the business transacted. Source documents records transactions as they are taking place. It prevents fraud, manipulation and cheating. They serve as evidences of the transactions even in the law courts. Source documents are of two types: The internally generated and the externally generated documents. Examples of source documents are:

Enquiry Sheet or note or letter

Quotation

Purchase Order

Waybill or Delivery Note

Goods Received Note (GRN)

Stores Requisition

Stores Issues Note

Stores Bin Card

Sales Invoice

Goods Return Outward Note

Goods Return Inward Note

Official Receipts

Credit/Debit Notes

Collection Sheets

Requisition Note: Payment/Cash/Cheque

Payment Vouchers

Petty Cash Vouchers etc.

You might have come across one or more of these documents and wondering what are they for. These documents are the various ‘evidences’ of your exchanges of give and take that you are making.

The importance of each of these documents depends on:

Who originates them

Who authorizes or approves them

Whether they are internally or externally generated

What response is expected to follow them.

These are offline documentation. When you talk of the online documentation, the computers or the internet systems have inbuilt systems of documentation that make it very easy and automatic. Such documents are in electronic forms and some can be printed for future reference. The speed of retrieval of information on line is extremely fast. Notwithstanding, the same principle of record keeping applies to both online and offline record keeping.

If you have been observant enough, the issue of proper record keeping and documentation on the internet has been taking a frontal attention. Many transactions now require identification known as KYC (Know Your Customers)

What is KYC? This is the documentation process whereby you will need to have evidence of who your customers are, what they are doing for a living and how you can get at them.

If you do not have these information and you freely transact business with some dubious characters, you may be a guest of EFCC officials and your accounts may be frozen. What is EFCC? Oh!… that is an acronym for Economic and Financial Crimes Commission – The law enforcement agency that specializes in tracking down the economic and financial crimes in Nigeria.

I’ll now take few of these documentations and explain them one by one so that you can have an idea of what they are all about.

Enquiry Sheet or note or letter

This is the first document that is prepared when you want to take steps to solve whatever problems or challenges you are facing. You need to have more information to enable you solve the problem. For example, you are building a house. You need cement to start the building. How do you acquire the cement at the best possible price. That constitutes a challenge. You may need to issue letter or form to ask questions as to the availability of the product and the conditions of purchase.

Quotation

In reply to your enquiry, what is given is usually quotation. Quotation therefore is the document you use to inform your potential customers that you have available the product they are looking for. It will also tell them how much they are going to pay and other conditions you may attach. For example, you may undertake to deliver it to their site.

Purchase Order

If your quotation is acceptable, your customer will issue a purchase order to authorize you to deliver the good you describe in the quotation. Usually, a lot of negotiation, horse-trading, maneuvering, tactics etc would have been employed by both parties in order to take advantage of the pricing and other conditions of the sale.

These documents are what I considered as pre-sell documentation. They are pre-sell because they occur at the initial stage of negotiation. They are the processes that have to be carried out in the course of agreeing on the rate at which goods and services will be exchanged.

Sometimes, the documentations may not be called the names I have given it. It may even be letters that are being exchanged. But when you look carefully at the contents of these letters, you discover that they may be grouped into any of the above mentioned categories. In my next post, I will take you through the documentation during the sales and after the sales.

Thank you and God bless.