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Companies Pay Purchases Vendor Amount Money Account Orders

Id ESLPod_0744_CN
Episode Id ESLPod 744
Episode Title Dealing With a Mistake
Title How Companies Place Orders
Text

Large companies can "place" (make) orders and pay for their purchases in many ways. One of the most common is a "purchase order," which was described in today's episode. A purchase order must be signed and approved by a manager before it can be "fulfilled" (the vendor or seller provides the desired items). This allows the manager to control how much of his or her "budget" (the amount of money that can be spent for a particular purpose) is spent.

Some companies have an "open account," which is like a credit account that the "vendor" (seller) provides to the company. The company's purchases are "deducted" (subtracted) from the "balance" (amount of money remaining) in the credit account, and "periodically" (at regular intervals of time), the vendor bills the company, requesting payment for the total amount "due" (owed).

Other companies "are billed" (receive bills) by vendors for individual purchases. Each time the company purchases something, the vendor sends an "invoice" (a document stating what was purchased, when, and how much it cost). The company usually has 30 days to pay the invoice, after which it may "incur" (have to pay something extra added to the bill) "late fees" (money that must be paid when the regular bill is not paid on time) and/or "interest" (a percentage increase in the amount due).

The company keeps track of the money it owes as "accounts payable," where each account represents one vendor. A computerized system allows the company to "pull up" (retrieve and display data) the current balance due on each account and see when those amounts must be paid.

Topics Business

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