What is Procurement?
Every organisation needs to procure or purchase a slew of products and services. The objective of a Procurement Policy is to ensure all purchases are authorised, and that the purchases accomplish the organisation’s goals. Hence, each organisation will have its own unique Procurement Policy, where the larger the organisation is, the more complex its Policy.
A Procurement Policy simply means a set of principles and procedures which includes approval limits e.g. a manager can approve a lower amount than the CEO.
What is Purchase Requisition?
This is an organisation’s internal process, where a purchase must follow its Procurement Policy. In short, it is a “Boss, can I buy this?” process. As one of the key considerations of most organisations is to minimise cost, to “ask first before buying” is extremely important. Just as an arts freelancer you might have paperwork to handle, know that the hiring organisation will also be managing many internal processes to get you hired.
What is a Quotation?
As part of the procurement process, you will be asked to give a Quotation. A Quotation is how organisations determine who best to appoint, whether on the basis of price, quality or scope. While doing up a Quotation may seem like extra paperwork, it is an essential part of your pitch and also often a compulsory internal procedure for the organisation wanting your service.
When asked to give a Quotation, please include:
a) Your scope of work or the description of the service you are offering or the item you are selling or renting to the organisation;
b) The fee or price you are hoping to receive; and
c) Any terms and conditions you may want from the organisation.
To help you get started, we have prepared a Quotation sample which you can adapt.
What is a Purchase Order and Order Form?
A “PO” is a Purchase Order that an organisation will give you after it has gotten approval to purchase your service. This is an external document to the vendor (that’s YOU) and forms a binding agreement when accepted by the vendor (yes, that’s YOU again). The PO will stipulate what is being purchased, at what price, and on what terms. Instead of accepting a PO, a vendor like you might want to issue an Order Form for the purchaser to accept, with all terms and conditions already pre-printed on the Order Form.
As an arts freelancer, it is quite unlikely that you will be issued a PO unless you are selling or renting out, say, an art-making equipment. You will also not need to create an Order Form for your hirer because you can simply ask your hirer to acknowledge on your Quotation with his signature and company stamp as acceptance of the work or item to be delivered. Just make sure you have all your terms and conditions stated on the Quotation.
What is a Letter of Agreement?
If an organisation is interested in hiring your skills and services as a freelancer on a contract basis, your binding contract is more likely to be a Letter of Agreement (LOA) rather than a PO, which spells out the salient contract terms between your hirer and you.
In the LOA, ensure the following is in place:
a) Your scope of work to be delivered;
b) The period you are given to complete this scope of work;
c) The fee given to you for this work;
d) Other expenses either the hirer or you will need to bear; and
e) Payment details, that is, how and when you expect to be paid.
As a point of reference, we have prepared a Letter of Agreement sample and a Performance Agreement sample which you can compare any Agreement you receive against.
What is an Invoice?
After delivering your project or service, you will often be required to issue an Invoice before you can be paid by the organisation. An Invoice is a payment demand for goods or services delivered, or for instalments due, based on contract terms. The organisation will match your Invoice to what was in your agreed contract, which could be your signed Quotation or your Letter of Agreement.
Before payment, the organisation will also assess the following:
a) Did you deliver as agreed, only partially, or not at all?
b) If it is a physical good like an art work that you have delivered, was it in agreed condition?
c) Was the delivery received and acknowledged by the organisation?
If all is in order, the organisation will then be able to process payment to you. So do issue that Invoice or you won’t get paid!
To help you get started, we have prepared an Invoice Without Tax Sample and an Invoice With Tax Sample for you to adapt.
Invoice without Taxis used if:
a) You are an independent arts practitioner with no company backing.
b) You have a registered arts business entity that does not need to be GST registered*.
Invoice with Tax is used if:
a) Your arts business entity is GST registered*ie. with a unique GST registration number.
*GST registration is compulsory only if your arts business entity has taxable income exceeding SGD1 million.
What is a Timesheet?
This is basically a record of hours you spent working on a project. If you are an hourly or daily rated arts freelancer, there should be a Timesheet given to you by your hirer that you will need to fill in dutifully. It is then acknowledged by your hirer with his signature and your signature together. A Timesheet serves as proof of work done, and it is a document your hirer can use to process payment to you, without the need for you to raise an Invoice.
In addition, it can be helpful for you to take the time to document your work progress with email correspondences, mobile messages exchanged, etc. with your hirer. These can all serve as proof of work done.
If your hirer does not give you a Timesheet, here is a Timesheet Sample you may propose to your hirer.
It is good practice to always keep a Timesheet even if your contract stipulates a fixed fee, that is, you are paid the same amount regardless of having worked 40hrs a week or 67hrs a week. Filling up a Timesheet diligently allows you to see the actual number of hours you have spent on a project, and serves as a valuable benchmark for your next project Quotation.
Here is a Timesheet Sample for Personal Tracking purposes, for reference and use.
In summary, your hirer having received your Invoice or Timesheet will:
a) Match it against the agreed contract; and
b) Verify you have indeed delivered as agreed upon, before making any payment to you.
Often, there will be a time-gap between your Invoice or Timesheet submission and the payment into your bank account, known as the credit term. Usual business-to-business credit term is 30 days or 1 month. As an individual, you may want to negotiate a shorter credit term of 14 days.