As your organisation grows, purchase orders become essential: they help you communicate your needs to suppliers, keep track of all the orders and manage your outgoing payments. While this entire process takes a lot of effort, it delivers significant benefits:
- You will be compelled to spell out the orders clearly, which helps prevent miscommunication
- You will be able to identify and avoid sudden price surges
- At any point of time, you will be able to track orders coming in
- You have the documents ready in case of a financial audit
- It is easier to reduce the number of duplicate orders
- Overall budget management improves through better visibility of outgoing payments
Having said that, the fact is that managing purchase orders can be a real pain in the neck. As your business achieves higher revenue and size, the complexity of your purchase order process will necessarily increase. Each order will require several elements: procurement requests, orders, authorizations, delivery confirmations, purchase invoic¬es. Further down the line, order acknowledgements, advice notes, packing slips, invoices, and other documents will be added.
As a result, each purchase will generate 5-7 documents on average. When you take into consideration the needs of a large organisation with multiple departments spread across geographies, you can understand the sheer complexity of managing the purchase orders. As your company expands, a manual, paper-dependent system grows untenable. Some of the common problems that SMEs and large corporations using paper-based systems encounter are:
- Increased risk of fraud, owing to the difficulty of checking each PO with relevant approver
- Higher dependency of skilled individuals that understand the system
- Greater costs and time of producing the purchase orders
- Increased chances of errors due to manual data entry
- Losses or higher processing costs due to erroneous payments
- Information is trapped in Excel sheets and emails – not easily available on a companywide scale
- Difficulty of teasing out business insights from the scattered information
- Inability to forward plan cash requirements
Digital PO systems offer a simple solution to all of the above problems. When you shift from manual processes that rely on Excel sheets and paper documents to a digital solution, the entire PO process is streamlined.
A PO system can help organisations to automate the ordering process, improve order tracking, generate accurate reports, simplify budget allocation, and create an audit trail. You can expect the following benefits by implementing a Purchase Order System:
- 100% order confirmation as both vendor and employee receive copies for the order cycle
- 0% invoice discrepancy and duplicate orders almost totally eliminated
- Up to 50% reduction in the processing costs
- Staff spends fewer hours on purchase approval and reconciliation
- Increased purchase order accountability through better reporting
- Better visibility in transactional data and approval history
- Improved budget management through quick and easy visibility of cash flow
Are you bogged down by manual and paper-based processes? Is your purchase order process losing your money?
There is an easy way out of the mess. Why not talk to our experts and find out how to digitise and simplify your PO process?