The AcquisitionPayment Business Process

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Chapter 9

• The Acquisition/Payment Business Process

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Chapter Learning Objectives

• Identify activities and documents common to
  acquisition/payment business processes for
  various enterprises
• Identify the components of the REA ontology in
  the acquisition/payment business process
• Create a REA business process level model for an
  enterprises acquisition/payment business process
• Identify common information needs within the
  acquisition/payment process
• Create queries to meet common information needs
  in the acquisition/payment process

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REA Acquisition/Payment Business Process Level
Pattern
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REA Acquisition/Payment Business Process Level
Pattern Operating Assets
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Acquisition/Payment Process Events

• Instigation Events in the Expenditures
• Are usually internally instigated triggered by
  an identified need
• External instigation is possible, e.g. need may
  be identified as result of supplier visit
• Internal agents involved in acquisition cycle
  instigation events usually are department
  supervisors (who identify the need and who
  authorize the eventual expenditure) and
  purchasing agents (who process the requisitions)
• External agents involved in acquisition cycle
  instigation events usually are suppliers
• Typically there is no need to specifically
  identify a good or service for purposes of
  instigation events information about the type of
  good or service promoted is usually sufficient

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Purchase/Requisition Event

• Purchase Requisition Event
• An instigation event that is entirely internal
  typically involves a department supervisor
  identifying a need for a type of good or service
  and communicating that need to the purchasing
  department
• Is usually symbolized by a purchase requisition
  document or data entry screen that summarizes
  information about this event (e.g. which
  department supervisor and which purchasing agent
  participated, date of request, date by which
  goods or services are needed, what goods and/or
  services are needed, any recommended
  source/supplier, etc.)

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Purchase Requisition
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Relational Tables Encompassing Purchase
Requisition event
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Acquisition/Payment Process Events

• Mutual Commitment Events in the Acquisition/
  Payment Process
• Involve the enterprise and an external business
  partner agreeing to exchange resources at a
  defined future time
• Dont always happen at a discrete point in time
  often involves a series of activities
• Internal agents are usually purchasing agents
• External agents usually are suppliers
• Typically there is no need to specifically
  identify a good or service for purposes of mutual
  commitment events information about the type of
  good or service promoted is usually sufficient
• Ideally enterprises would like to be able to
  trace mutual commitment events to the instigation
  events that triggered them

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Purchase Order Event

• A mutual commitment event whereby a supplier
  agrees to provide goods to the enterprise and the
  enterprise agrees to pay an ascertained price for
  those goods
• Is usually symbolized by a purchase order
  document or data entry screen that summarizes
  information about this event (e.g. order date,
  promised delivery date, payment terms, dollar
  amount, which supplier and purchasing agent
  participated, what products the enterprise
  ordered, etc.)

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Rental Order Event

• A mutual commitment event whereby a supplier
  agrees to transfer possession of some goods to
  the enterprise for a defined time period and
  bestows on the enterprise the right to use the
  goods for a prescribed purpose in exchange the
  enterprise agrees to pay an ascertained price
• Is usually symbolized by a rental contract
  document that summarizes information about this
  agreement (e.g. contract date, dollar amount,
  goods to be rented, time period for which each
  good is to be rented, payment terms, which
  purchasing agent and suppliers participated, etc.)

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Service Order Event

• A mutual commitment event whereby a supplier
  agrees to perform one or more services for the
  enterprise during a defined time period for an
  agreed upon price to be paid by the enterprise
• Is usually symbolized by a service contract
  document that summarizes information about this
  agreement (e.g. contract date, dollar amount,
  services to be performed by supplier, time period
  during which services will be performed, payment
  terms, which purchasing agent and supplier
  participated, etc.)

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Purchase Order
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Relational Tables Encompassing Purchase Order
Event
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Acquisition/Payment Process Events

• Economic Increment Events in the Acquisition
  Cycle
• Represent the receipt of goods or services for
  which the enterprise will give up some other
  resource (usually cash)
• Do not always happen at discrete points in time
  may involve a series of workflow activities
• Resources vary for different types of businesses
• Inventory (Inventory type may substitute for
  Inventory), Services (Service Type may substitute
  for Services), Temporary use of asset (as in a
  rental)
• Internal Agents are typically purchasing agents
  and receiving clerks
• External Agents are typically suppliers or vendors

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Purchase (aka Acquisition) Event

• Economic increment event in which title
  (ownership) of one or more products is
  transferred from a supplier to the enterprise.
  The transfer may take place in person (e.g.,
  purchase agent goes to Office Depot to buy paper,
  or supplier hand-delivers goods to enterprise) or
  via transit (supplier shipped goods to
  enterprise)
• Usually symbolized by a receiving report document
  or data entry screen that summarizes information
  about the title transfer (e.g. date, dollar
  amount, product(s) for which title transferred,
  payment terms, which purchase agent and supplier
  participated, etc. Supplier invoice information
  may also be included in recording this event, but
  should not be used as the exclusive
  representation of this event (because there is
  usually a time lag between title transfer and
  receipt of supplier invoice)

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Rental Acquisition Event

• Economic increment event in which possession of
  goods is transferred to the enterprise by a
  supplier for an agreed upon length of time for an
  agreed upon purpose and price
• Usually occurs over an extended period of time,
  rather than occurring at a single point in time
• Is usually symbolized by documents or data entry
  screens that summarize information about the
  transfer of possession of goods from the supplier
  to the enterprise and then the return of goods to
  the supplier (e.g. dates, times, which products,
  suppliers, and employees were involved, etc.)

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Service Acquisition Event

• Economic increment event in which a supplier
  performs one or more types of service for the
  enterprise
• May occur over a period of time or may be
  performed at a single point in time
• Is usually symbolized by a document indicating
  the receipt of services (or equivalent data entry
  screens) that summarize the information (e.g.
  dates, times, types of service performed, the
  supplier and employee involved, possibly some
  notes as to the quality of services received,
  etc.)

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Receiving Report
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Vendor (Supplier) Invoice
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Relational Tables Encompassing Purchase Event
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Acquisition/Payment Process Events

• Economic Decrement Events in the Acquisition
  Cycle
• Almost always is a Cash Disbursement event
• An economic decrement event whereby the
  enterprise transfers ownership of cash (or
  equivalent) to a supplier
• Is usually symbolized by a check or disbursement
  voucher document or data entry screen that
  summarizes the information about the event (e.g
  date, dollar amount, supplier to whom cash was
  disbursed, employee who authorized the payment,
  acquisition or other event to which cash
  disbursement applied, etc.)
• Resource is typically cash (a type-level resource
  usually a listing of cash accounts owned by the
  enterprise)
• Internal agents are usually cashiers, accounts
  payable clerks, or other financing personnel
• External agents are usually suppliers or vendors

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Disbursement Voucher
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Relational Tables Encompassing Cash Disbursement
Event
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Acquisition/Payment Process Events

• Economic Increment Reversal Events
• Events in which previous economic increment
  events are reversed or negated
• Although similar in mechanics, such events are
  inherently different from economic decrement
  events
• Giving something back that you had hoped would
  satisfy your needs, even though you will receive
  back what you gave in exchange, is not the same
  as giving something up in exchange for something
  you want more
• Resources, Internal Agents, and External Agents
  are the same as those for economic increment
  events

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Purchase Return Event

• Economic event in which title (ownership) for
  goods previously transferred from a supplier to
  the enterprise are transferred back from the
  enterprise to the supplier
• Although a resource (or resource type) is
  decreased as a result, the nature of purchase
  returns is different from other economic
  decrement events. The substance of the event is
  such that the original economic increment event
  is negated. Thus we label such events as economic
  increment-reversal events
• Is usually symbolized by authorized request to
  return, packing list, and debit memorandum
  documents or data entry screens that summarize
  information about the event (e.g. date, what
  quantities of which products were returned to
  supplier, dollar amount, etc.)

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Request to Return
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Packing List
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Debit Memorandum
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Acquisition/Payment Process Relationships

• Proposition relationships
• Between Purchase Requisition event and Inventory
  (or Inventory Type or Service Type)
• Reservation relationships
• Between Purchase Order, Rental Contract, or
  Service Contract and Inventory (or Inventory Type
  or Service Type)
• Also between Purchase Order, Rental Contract, or
  Service Contract and Cash
• Stock flow relationships
• Between Purchase (or Rental or Service
  Acquisition) and Inventory (or Inventory Type or
  Service Type)
• Between Purchase Return and Inventory (or
  Inventory Type)
• Between Cash and Cash Disbursement

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Chapter 9

• End of Chapter