Organisations that manage purchases centrally, uniformly and with a strict Purchase Order Process in place, have a greater level of control over the entire procurement process. They can reduce costly errors, avoid mistakes and enhance processes.If there are currently no rules in place, ask yourself that without a Purchase Order Process in place:
If the answers to these questions present more problems than solutions, look at implementing an automated Purchase Order Process.
A Purchase Order Process is a way of ensuring goods are ordered, approved, received and paid for in set way, as required by the business.
Having a process in place not only ensures employees know how to order what they require, but it also stops them from making an incorrect order.
The process should start with a Purchase Order Requisition, which is an internal document used by an employee to request goods or services.
This document may go through a number of approvals with the purchasing or accounts department to check accuracy. It could be approved, rejected or adjusted.
An approved purchase requisition then gives the go ahead to create a Purchase Order.
A Purchase Order acts as a binding contact between a customer and a supplier. It agrees the price and the quantity of a product or service and is sent out by the customer. It is accepted by the supplier who is now obliged to deliver the goods.
Need to understand more? Read our blog on Purchase Requisitions vs Purchase Orders.
When the invoice is received it should match what's listed on the Purchase Order and the two documents are linked by the same reference or PO number. Once the invoice is approved and / or delivery note confirmed, the supplier is paid.
All the steps of a Purchase Order Process are important, but they don't need to be manual, time consuming or documented on paper. Automating the entire process will make it quicker, streamlined and more efficient.
Implementing a Purchase Order Process will only succeed as long as the work required doesn't become a burden to staff.
With our automation software the administration of scanning, manually filing paper or entering data by hand is removed and replaced with digital workflows.
A Purchase Order Requisition form can be created in the Purchase Order System eliminating the need for a physical piece of paper. Information such as suppliers, price, reason for purchase, department required, budget etc. is readily available to select from, as the information can be pulled from a separate database into the system.
This starts the process digitally, saves time and reduces the chance for errors. Documents don't need to be emailed and paper doesn't need to be passed around.
At this point a notification will be sent to a manager in purchasing or finance who can approve or reject the request from anywhere with an internet connection. When approved the Purchase Order is automatically sent to the supplier.
Once the goods are received and the invoice stored in the software, it will be matched to the corresponding PO and if all details correlate, authorised for payment.
Any discrepancies will be flagged to the appropriate person, with all documents linked together and stored digitally. A fully automated Purchase to Pay system manages the entire process, reducing the chance of errors and making it easier to manage approvals.
Our software can also automate a 3 way match of a purchase order, delivery note and invoice saving staff valuable time compared with manual processes. Read our blog on 3 Way Matching in Accounts Payable for more information.
With an ever growing number of business transactions, digitally managing your Purchase Order Process is more important than ever.
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