THE FEDERAL POLYTECHNIC DAMATURU

YOBE STATE NIGERIA

DEPARTMENT OF MARKETING
SCHOOL OF MANAGEMENT STUDIES

COURSE CODE: PUSS 121

COURSE TITLE: PRACTICE OF PURCHASING

LEVEL: NATIONAL DIPLOMA 1

SEMESTER: 2ND

BEING A LECTUTRE NOTE PREPARED

BY:

ABUBAKAR ABDULLAHI AYYUBA

SESSION: 2020/2021
 SUMMARY NOTE

TOPIC: UNDERSTAND INPORT AND EXPORT ASPECT

INTRODUCTION

Before doing business abroad, one need to or its important to understand the basis of the

international trade components (i.e import, export and entrepot) which will give one the

comprehension of the myriad hoops one must jump through the selling and purchasing a product

from oversea.

Definition of:

a. Import: Can be viewed as a transaction in goods and services to a resident of a jurisdiction

(such as a nation) from non-resident.

b. Export: Can be define as the goods and services produced in one country and purchased by

residents of another country. It doesn’t matter what the good or service is. It doesn’t matter

how it is sent by email or carried in personal luggage on a plane.

c. Entrepot: An entrepot or transhipment port is a port, city or trading post where

merchandise may be imported, stored or traded, usually to be exported again.

d. Importation: Is defined as the act or practice of importing . i.e the commercial activity of

buying and bringing in goods from foreign country.

e. Exportation: is the process or the act of exporting, the act of conveying or sending

commodities abroad or another country.

Explain basic import procedures and documentation

 Import is a very important function of our /to any nation economy. That is why it is one of

the most regulated sectors of our economy and below follows the documents used in an

inport transaction.

1. Proforma invoice

2. Import order or indent

3. Shipment counsel

4. Bill of lading

5. Bill of entry

6. Letter of credit

7. Trade enquiry equipment

Proforma Invoice: is a record that contains points of interest with regard to the quality, review,

design, mass, weigh and cost of the exported merchandise and the terms and conditions on which

their transaction will occur.

Import order or indent: It is a documentation in which the importer orders for supply of

imperative merchandise to the supplier. The order containing the data for example, amount and

nature of merchandise value a technique for sending the merchandise packing process method of

payment and so forth.

Shipment counsel: The exporter sends shipment advice to the importer for telling him that the

merchandise has been dispatched and it contains invoice number, bill of lading / airway bill

number and date, the port of export e.t.c

Bill of lading : it is readied and marked by the captain of the ship recognizing the receipt of

merchandise on board. It contains terms and conditions on which the product are to be taken to the

destination.
Bill of Entry: it is a form provided by the customs office to the importer who filled it at the

duration of getting the merchandise. It must be triplicate and is to be submitted to the customs

office.

Letter of credit: It is a document that contains a certification from the importer bank to the

exporters bank that is attempted to inspect payment up to a specific sum of the bill issued by the

exporter for transportation of the products to the importer.

Trade Enquiy: it is written request made by a logistic firm o the abroad provider for guiding data

in regard to the cost and different terms and conditions for trading merchandise.

EXPLAINING IMPORT DUTIES AND TARIFF

IMPORT DUTIES

Import duties also known as custom duty , import tax or tariff is an indirect tax collected on import

and some exports by a country’s custom authorities to raise state revenue and also serve as a form

of regulation of foreign trade and policy that taxes foreign products to encourage or safeguard

domestic industry.

Note: Import duty is a tax imposed by a government on goods from other countries

TARIFF

Tariff is also a tax imposed by a government of a country or of a supernatural union on imports or

exports of goods.

Tariff can be fixed ( a constant sum per unit of imported goods or a percentage of the price)

Example
In the instance of importing a vehicle to Nigeria, you need to pay 35% of the vehicle cost as an

obligation in addition to a 35% duty. Subsequently the cost of clearing a vehicle is 70% of the

expense of the vehicle. However this can be negatively affect your spending plan of buying the

vehicle abroad. This means that a car worth2 million Naira will be cleared with 1.4 million Naira.

Explaining purchasing for export requirements

A part from the basic export document, the requirement requirement for purchasing for export

from exporting country. However the following are requirement to export goods from exporting

country after purchase in general.

1. Commercial invoice: The commercial is a record or evidence of the transaction between the

exporter and the importer with the terms that both parties have agreed upon in advance.

Once the goods are available, the exporter issues e commercisl invoice to the importer who

has to sign a copy and return it to the exporter.

2. Packing List: The packing list is prepared by the producer / exporter the packing list

provides information on the inported items and the packaging details of each shipment

3. Certificate of Origin: The certificate of origin is necessary for exporter to benefit from

preferential tariff treatment. This document is available at the customs Department of the

ministry of finance and at the chamber of commerce and has ro be endorsed by the ministry

of finance

4. Any other document

Describe export procedures and documentation Export procedure

The export procedure are;

1. Exporter gets a request from the potential buyer asking for data with repect to cost, standard

and different terms and conditions for transportation of merchandise. The exporter answered

with a citation known as Proforma invoice.

2. In the event that the purchaser approves of the part of term and conditions, he puts in the

request or indent for the merchandise.

3. In thewake up getting the request or indent, the exporter attempts an inquery wit repect to

the financial soundness of the importer to evaluate the danger of non payment by the

importer.\

4. As indicated by customs laws , the exporter or the export firm should have a fare permit

before continuing with export. The following steps are taken after for acquiring the export

licene.

A. Opening record in any approved bank

B. To acquire import export code (IEC)number from Directorate General Foreign Trade

(DGFT)or Regional Import Export Licensing Authority (RIELA)

C. Register with suitable export promoting comitee or council (NEPC)

D. To get enrolled with Export Credit Credit and Guarantee Corporation (ECGP)

5. After getting the export licence the exporter meets with his banker to get pre-dispatch finance

for carrying out production.

6. Exporter, after getting the pre-shipment fund from the bank looks at to prepare the

marchendise according to the importer

7. And so on.

Export document

a. Document related to goods

1. Seller bill

2. Certificate of inspection

3. Packing List

4. Testament of Origin
b. Document related to ship are

1. Transportation bill

2. mate’s receipt

3. Bill of Lading

4. Airway bill

5. Cart Ticket

6. Marine insurance policy

c. Document related to payments are

1. Letter of credit

2. Bill of Exchange

3. Bank Certificate of payment

 TOPIC: BASIC CONTROL DOCUMENT USED IN PURCHASING

Defination of purchase requisition and its functions.

Purchase requisition also known as a purchase request form is a document that is used to request a

purchase order. It is the first step in the procurement process for a company to obtaion supplies,

services and purchase from within the purchasing department

Its Function

1. It serve as a request for purchase order

2. It is a document that is used to inform department managers or purchasing officers of the

decision so that the purchasing department can start the purchasing process.

3. It prevent fraud if done directly by the purchasing officer or department managers.

Specimen of the purchase requisition

S/N PURCHASE REQUISITION Date:

Material Description Size Quantity JOB Delivery Purchase Order

Code no
Date Place No. Rate Supplier

Authorized Signature

Description of Bill of material and the purpose it serve

Bill of material is a comprehensive lists of material with specifications material codes and

quantity of each material required for a particular process or production unit. The bill of

material can be understood as the recipe and shopping list for creating final product.
The Purpose it serves

1. It is a planning exercise for the proposed production or work.

2. It serve as an adverse intimation to store department about the raw material requirement

3. The material cost to be charged to a particular Unit, Job or Process can easily be

determined before hand.

4. It is a good control measure on material cost

Specimen of the bill of material

Bill Of Material
Job No: S/No:
Job Starting Date: Date:
Job Finishing Date:
S/N Material Descriptio Size / Quantit Issue Particulars
Unit Date Quantity Rate Amount
Code No n y

Production Planning dept. Purchase Dept. Store Dept. Costing Dept. Prodution Control Dept

Description of an enquiry forms and it uses

Enquiry form is a document in the purchase process which allows a prospective

customer to “make an enquiry’ about a product or service of an organization.

Its Uses

1. It gives room to know more about a product or service thoroughly

2. It makes everything simple and easy for both parties.

Specimen of an Enquiry Form.

 Descrition of Purchase order and its uses

Purchase order is a document outlining the details of an actual purchase. If the

purchase is requisition received by the urchasing separtment is in order then it will

call for tender or qoations from the supply details of materials. It will send enquiries

to perspective suppliers giving details of requirement and requisting detail of

available material price, term and delivery e.t.c

Its Uses

1. It is used to summarise the detail of an actual purchase

2. It serve as a set of instruction to the vendor on how to fulfill order and process

payment.

Specimen of a Purchase Order.

Explain advice notes and its uses

An Advice note is a document that confirms the receipt and dispatched of customer

order. The document is sent by a supplier to a customer to inform him that the goods

odered has been dispatched.

its uses

1. It is used to make the customer informedabout the status of his order.

2. It alert the buyer(s) to start making arrangement for payment for goods

Product enquiry