General Stores manages a centralized program for air and gas products obtained from Air Products and Chemicals, Inc. The program will involve, expediting payments for purchases and demurrage charges, coordinating returns of empty cylinders and inventorying cylinders on hand.
It is expected that this centrally managed program will reduce the overall cost of obtaining air and gas products. Since payments will be consolidated into fewer checks, fewer Purchase Orders will be issued and demurrage charges will be reduced.
General Stores will establish two (2) Limit Sum orders with Air Products, one (1) which will be used for purchases, the other for payment of demurrage charges. The amount of the Limit Sums will be based on historical data.
Orders for air and gas products will be telephoned to the vendor by General Stores personnel authorized to order against Limit Sum Purchase Orders. Each delivery point (department) will be designated an account number which must be included on all orders. After delivery of orders bills will be sent directly to General Stores.
Invoices will be edited for accuracy before being sent to Accounts Payable for payment. Any discrepancies on invoices will be settled with the vendor before payment is approved.
All departments which presently obtain services from Air Products will each be required to establish two (2) Limit Sum Requests with General Stores to cover the estimated costs of gas purchases and demurrage charges. The sum total of departmental Limit Sums will be used to establish a Limit Sum with Air Products. Departments must include on the Limit Sum Request names of two (2) individuals authorized to place telephone requests for gas products to be charged against Limit Sum requests.
After processing invoices to Accounts Payable, General Stores will charge individual departmental accounts for their portion of purchases and demurrage charges. The appropriate amounts will be deducted from Limit Sum balances and credited back to the General Stores Account against which the original payment was charged.
Utilization of this system would result in prompt payments to Air Products and allow more careful monitoring of cylinder returns and demurrage charges.