What is the expenditure cycle?

The expenditure cycle is a type of process that helps to define what is happening from the place that the company or consumer decides that the purchase of the goods or services is necessary to the extent that the purchase is paid in full. The number and type of steps included in the cycle will vary, based on the complexity of research and finally obtaining a purchase permit. This process can further be complicated on the basis of the principles and procedures that are involved in deciding when and how to offer payment for these purchases.

For many companies, the expenditure cycle begins by granting permission to make a specific purchase. The party that wishes to make a purchase must usually submit what is known as the propulsion form to the shopping agent or department. If the agent checks the props and discovers that the required item is in the company's pricing and budget limitations, the next step in the cycle includes the issue of the order number. At this point, the party that submitted the original application mayt by an authorized supplier and place an order, carefully note that the order number assigned by a purchasing agent must be included as part of the details found on the order for the order.

Once the order is placed and the required item is delivered, the next step in the expenditure cycle includes accounting of the item receiving and assigning costs to a specific department or distribution into the company's structure. Depending on the type of company involved, the item may be placed in an active inventory until it is actually paid to a specific department. For example, the raw materials used in the creation of goods offered by the company for sale in the production process.

The last steps in the expenditure cycle include planning payment for purchased goods. In some cases, the cycle is very short, as when the payment must be offered at the time of delivery. Other times this last part of the expenditure cycle fromAnd to make the current outstanding invoices based on the supplier's due terms, while the accounts are reviewed and approved by each invoice for payment. At this point, a payment is scheduled to take place at the actual due date of the invoice. Depending on the company's principles, this payment may be in the form of an electronic transmission made to the supplier's account or the paper control that is prepared and sent to the remittance address delivered by the seller. After the payment is processed, the expenditure cycle is usually considered to delete the bank.