Purchasing Pointers - say good-bye to those buying blunders!

We've all done it - bought something that really wasn't right. (Hand on heart - whose wardrobe doesn't hold at least one expensive mistake?) But when you're spending the firm's money, you can't afford to make costly errors. Business journalist Sara Goodwins outlines some expert advice to help you spruce up your purchasing skills

By Sara Goodwins

Ever bought something in the certain knowledge that it's exactly right… and then found out afterwards that it won't do? Sales staff are paid to be friendly and helpful and to persuade you that what you want is the same as what they're offering - which is not always the case! Good purchasing skills put you in control and ensure that you get what you need at a price you can afford.

Skilful negotiation is vital for getting the best deal. Before you start:

* recognise that prices are never fixed

* decide what you need (as opposed to what you'd like), when you need it and what your budget can bear

* prepare a written and detailed spec to prevent claims of misunderstanding

* contact colleagues to see whether anyone else also needs the item/service.

Most people aren't comfortable talking about money. Unscrupulous sales reps see such customer diffidence as an opportunity to increase the price and it's your job as the buyer to bring it down again. Getting written quotations from at least three different suppliers is an easy safeguard against inflated profit margins, but there are more active ways of decreasing costs.

Firms will often agree a discount if you merely ask for it. Play one supplier off against another and you may be able to reduce the quoted price by as much as 15%. Do so openly and honestly, and above all be pleasant; even if you don't get your discount, your approach will be respected rather than resented.

Bulk orders usually carry automatic discounts (although you must decide whether the monetary saving is worth tying up your firm's capital earlier than strictly necessary). Ordering larger quantities makes your custom more valuable and also increases your negotiating power.

When negotiating remember:

* not to divulge the maximum price you're prepared to pay

* to compare the quotations, not only for price but also for extra benefits such as longer or more comprehensive warranties, split-site deliveries, etc

* to avoid being influenced by irrelevancies such as free gifts or features you don't need

* that a visit to the supplier's site can be a useful insight into its efficiency and reliability

* to consider all the angles before you commit yourself

* not to be in a hurry

* that price is not everything!

With inexpensive purchases you need to weigh up the potential savings of finding a lower price against the cost of your time. Even so, don't automatically re-order from the same supplier every time you're running low. Office staff receive a bewildering number of sales catalogues both on paper and on line; take a minute to compare one or two prices for items you commonly buy. If a new supplier quotes a lower price for the same product, try them out. If its delivery arrangements are acceptable then you make an almost instant saving.

To buy or not to buy?
Firstly, decide whether you need to buy at all. Negotiating the lease or short-term hire of equipment or outsourcing routine work, could save you and your firm time and money. In addition, expanding the use of existing equipment by exploiting its lesser known features might save you the cost of an upgrade.

If you do decide to buy new equipment, do you need to buy the most up-to-date available? When firms release a new PC or copier, etc, older versions of the equipment are often offered at a very advantageous price.

The timing of major purchases is also important, particularly if the price can be offset against tax. Seek the advice of your finance department to arrange for the invoice to arrive within the most appropriate annual reporting dates. Many buyers also forget to check invoices when they're presented. Reputable firms will not deliberately overcharge but mistakes can happen, particularly if you've negotiated a special price.

Buying has been complicated by the advent of the internet and the ability to purchase items electronically via the web. According to research conducted by the Chartered Institute of Purchasing and Supply (CIPS), 51% of businesses which buy online report a saving on expected purchase prices and most expect to be sourcing goods and services on the internet by 2005. Confidence in e-buying is growing but there are still doubts about payment security.

TrustUK, a non-profit organisation endorsed by government, vets webtraders to ensure that their websites meet approved consumer standards; accredited sites are permitted to display the TrustUK logo. The European Union Distance Selling Directive also protects those ordering on line; further information is available from the UK Office of Fair Trading.

When all sides agree
Probably the most vital aspect of purchasing is to make sure that all parties keep to the agreement as signed. An advance agreement for a major reduction in price is good business; any subsequent attempt by either side to charge more or pay less will cost a great deal more that it's worth in goodwill. Suppliers' standard terms are, of course, biased in their favour, so ask them to change any clauses you're not happy with. Even if it's not worth drawing up a formal contract, the main points of the agreement should be put in writing as a memorandum of understanding and signed by both parties.

And don't forget to read it first. Yes, it's obvious, but when you're busy it's tempting to skip the boring details like reading the small print. One publisher estimated that a staggering 98% of its contributors didn't read their contract before signing it.

Those who do a lot of buying might find software useful which compares different potential purchases, and estimates and analyses savings opportunities. I-SAVE (Independent Savings Analysis Verification and Evaluation) for example, is available free of charge to UK companies from www.oracle.com/uk/start/isave and is endorsed by CIPS.

Professional buyers often expect to save their firm more than their annual salary. While few of us are able to make such large savings, many have a lot of purchasing power. A determination to gain the best deal combined with skilful negotiations not only saves you time and money but also demonstrates very clearly your value to your firm.

A freelance writer for over twenty years, the last ten of them full-time, Sara Goodwins has researched and written about a multitude of different topics. She tends to specialise in all aspects of business and education and her features are regularly published internationally

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