Purchase Proposal

Wherever it is, there will always be things that you will need that you will have to acquire. When working in a company or organization, there is bound to be multiple needs for the employees and the company itself in order to perform the tasks and activities better. With that in mind, you will have to upgrade your current equipment or materials and purchase newer ones to replace them. However, since the corporate world functions following specific processes and procedures, you will have to document your needs and maybe even justify why such a ‘need’ exists.

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If such ‘needs’ exist, you will have to propose to your executives why the needs exist, why and how you should resolve it. In the corporate world, you have to follow the proper procedures; otherwise, you will not be given the chance to solve the issue. For example, if the printer that you currently have is no longer working properly and it has been repaired a few times already, you will have to purchase a new one. To do that, you will have to make a purchase proposal for your need so that your executives can approve and allocate sufficient budget for it.

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What is a Purchase Proposal?

As mentioned earlier, a purchase proposal is a document presented when there is a need for approval when purchasing product/s from the seller. This is most commonly used in the corporate setting since employees cannot directly go and purchase materials or equipment since an approval from the executives are needed in order to acquire monetary budget.

In this sense, a purchase proposal outlines the buyer’s proposition to purchase a product. It includes the price the buyer will pay the seller in order to successfully purchase the product. In some cases, a purchase proposal also includes the reason why there is a need to purchase the said product. Furthermore, a purchase proposal may also include inclusions and exclusions or the terms and conditions that the buyer and/or seller has agreed on.

Therefore, a purchase proposal is a document that enables a buyer and a seller to go into a business transaction purchasing product/s that are on sale. Aside from that, this proposal can also be used to propose a purchase proposition to executives in order to gain approval and have allocated budget. Although it can be used for personal purchases especially concerning a huge sum of money, the corporate industry uses it more often for transparency as well as accountability purposes.

Sections of a Purchase Proposal

A purchase proposal is an important document that will help you successfully purchase the equipment or materials that you need in order to perform tasks and activities better. In order to make an effective purchase proposal you have to know and understand what you need to write or include in the document. In this case, the sections you need to include in a purchase proposal as well as the guide questions you can refer to in order to make them right is listed below:

1. Overview

The overview of your purchase proposal basically gives an introduction as to what the document is all about, what it is for, why a need for purchase arose and so on. It basically gives the reader an idea why the document was written in the first place. It helps the reader understand the primary information about the significance of the document. When writing this part of the purchase proposal, you must be able to answer or at least refer to the following questions:

• What is the current solution?
• What changed / Why change?
• What is the proposed solution?

2. Analysis

The analysis section of your purchase proposal must present strong supporting data as to why a purchase for the product is necessary for the company or organization. In this sense, the analysis must also be able to present data that will make true to your claims that a new material or equipment must be purchased in place of what is currently in use. As guide to making this section of your document, here are some questions you can refer to:

• How does the proposed solution compare to the current solution?
• Advantages and additional details?

3. Cost

Since there is a need to purchase new materials or equipment, there is also an equivalent price for the product that you intend to purchase. With that in mind, you must be able to present the price you will have to pay so that the executives will have knowledge how much money they will have to shell out form the budget. Aside from that, you must also be able to present the intelligent choices to help them decide which will be the most cost-effective. Listed below are some guide questions in writing this section of the document:

• What does it cost?
• What are the options?

4. Concerns

The next section of your proposal is intended for the concerns that may arise before, during and after the purchase. It should be explicitly stated in the document so that the advantages and disadvantages of pursuing the purchase can be weighed in before the actual purchase is made. This will help ensure that all possible options are considered before a decision is made. In order to effectively write this section of the document, answer the question “What are the disadvantages or potential issues?”

5. Summary

The summary of your proposal should be able to clearly explain why the purchase is necessary for the company or organization. It should present the reasoning used to come up with the decision of having to purchase the material or equipment. In addition to that, the necessary steps to be taken afterwards should also be explained in this part of the purchase proposal. Use the following questions as guide to writing this section:

• Why is the proposed solution needed?
• What are the next steps?

How to Write a Purchase Proposal

Now that you have an idea as to what a purchase proposal is, what it is practically used for and what the necessary sections to include are, you can now proceed to writing the document. However, how do you make sure it serves its purpose effectively? To help you with that, here is an easy guide on how you can write an effective purchase proposal:

• Present the problem that you are currently trying to solve. You have to be able to clearly present what is the cause for deciding to purchase new materials or equipment. You have to convincingly present the information stating the necessity of the action.
• Include the current solution or current material or equipment in use and how it can no longer serve its purpose. Since there is problem, mention how the current material, equipment or product in use needs to be updated. For example, you can mention how it cuts the efficiency of the employees currently using it or how it is no longer functioning as it is supposed to. You basically have to justify the need for the purchase.
• Present the solution you are proposing. In this case, present your idea of purchasing something the product. For example, if the proposal is focused on upgrading, this is where you present the model or unit you think is best for the upgrade. You have to present this clearly and determine its difference, and advantages and disadvantages of your proposal.
• You have to determine the seller or provider that best suits your interest. You have to present the provider of the product you are looking for in a clear manner. Researching about each possible provider is important so that you can accurately present data and information that can help in the deciding process. You can effectively do this by making a comparison chart including the price range for the same product from different providers. This will help the executives have a visible comparison on who to choose or where to purchase the product from.
• Lastly, make sure to provide a summary or conclusion for your document. This should encapsulate the points you were trying to make i.e. the problem, solution, supporting data, and so on. You have to clearly mention why this action is necessary and that the company or organization can greatly benefit from it. Aside from that, you also have to mention that you are willing to negotiate and change some aspects of the proposal if deemed necessary.

Conclusion

A purchase proposal is a document that can help in making a purchase action successful. Most businesses use this document to make sure that all factor are considered before diving into a purchase that deals with any amount of money. Businesses need to keep an account to what and how much they spend in order to determine how much they were able to gain throughout the year, and a purchase proposal helps keep transparency and accountability in the company.

Moreover, a purchase proposal will also make it clear for everyone involved why there is a necessity to take such actions. It will make everyone understand the need and why such solution was chosen. It also helps everyone make better decisions in terms of choosing the right supplier that offers the needed goods for the right price.

Since it provides a comparison between prices of the same thing from different suppliers, it is will greatly help the business choose the most cost-effective supplier. We hope that you have learned valuable knowledge about purchase proposals through the discussions in this guide.