PO Systems for Small Business:Purchase orders may appear to be an unnecessary step that adds to your paperwork burden.
Many small businesses do not even use purchase orders, instead relying on seller invoices to document orders.
After all, why bother keeping a record of your purchase request if the seller will send you something with similar information?But what if your supplier sends the wrong item?
Or did they send you too many or too few of the items you requested?
Without a record of your original purchase, resolving these issues can be time-consuming.
Sometimes you can’t even solve the problem.
PO Systems for Small Business
Ignoring purchase orders may work in the short term if your business is small.
But, in the long run, and as your company grows, documenting your purchases becomes increasingly important.
Every business must make purchases.
And the more purchases you make, the more important it is to have a good purchasing system.
Purchase orders allow you to track purchases and legally protect your company if there is a problem with the seller.
They can be a huge help to your small business.
However, if you start using purchase orders without a reliable purchasing system in place, they can quickly become inconvenient.
That is why it is critical to begin with a purchase order system that works for you.
This article will assist you in doing so.
What is the definition of a purchase order system?
A purchase order system assists businesses in managing and controlling their purchase orders and the procurement process.
Because managing procurement and purchasing can be difficult, it is critical to develop a workflow that assists businesses in managing their POs.
Purchase orders are legally binding agreements between two parties, so it is critical for businesses to always deliver on their promises in order to avoid future legal issues.
This can be difficult as your company grows and your manual purchase order process becomes ineffective and inefficient.
An online PO system enables businesses to easily automate and control spending in order to create a workflow that is tailored to their unique business practices.
What exactly is the distinction between a purchase order and an invoice?
It’s easy to mix up the two documents because they both provide a record of a transaction between a buyer and seller.
But here’s the key distinction:
A purchase order is sent by a buyer to a vendor (also known as a seller or supplier) to confirm their intent to purchase the listed goods and/or services.
A vendor (also known as a seller or supplier) sends an invoice to a buyer to charge the buyer for goods and/or services provided.
The two are frequently used in tandem, with an invoice usually coming after a purchase order or after goods/services have been delivered.
As a result, invoices should include information that corresponds to their corresponding purchase orders; some may even include the purchase order number directly.
There are numerous invoice templates available online.
Why should you use a purchase order system?
PO systems are simple to use and can boost productivity and efficiency among all members of a company’s team.
While you may believe your current manual process is adequate, you will be astounded by the benefits of a cloud-based purchase order system.
Here are some of the benefits of using purchase order software to automate your processes:
Time is money.
Some issues can cause a breakdown in your purchasing process, preventing efficiency and even halting the entire process.
When doing things by hand, it can be difficult to read certain handwriting, and attempting to read it can waste valuable company time.
A lack of authorization may also cause a pause when a specific person is required to sign off on a purchase order.
PO software systems completely automate this process, so you no longer have to waste time waiting for someone else to finish a PO and have it approved for another department.
Assist in the control of spending/budgeting
You can easily track and control your spending when all of your spending is in one procurement and purchasing system.
It will also be useful for future budgeting, allowing you to see exactly how much your company is spending and easily compare cost-cutting solutions.
Allow for Planning
A PO management system allows your company to plan ahead of time.
Because different departments will have access to the system’s purchase orders, team members from various departments can plan their workdays around purchasing and procurement.
Production, for example, can use tracking to ensure that their jobs are being done correctly and efficiently without the need for supervision.
Get Rid of Hiccups
People make mistakes, but software purchases do not.
Whether a number looks like a six or an eight when written down, using an efficient PO ordering system eliminates these errors completely.
Your POs are legally binding documents that can help protect you from future litigation, so keep them in a secure location where nothing can be tampered with or destroyed accidentally.
Enhance Inventory Management
While you can manage your inventory in a variety of ways, purchase and procurement software allows you to more easily see what’s available in your inventory so that when a customer places an order, you know you have those items in stock, reducing the likelihood of unhappy customers in the future.
How can you automate your purchase order process?
Whether you are completely new to the process or intend to retire your current purchasing software, there are three steps you must take when automating your web-based PO management system.
Establish Your Purchasing Policy
When you set up a new system to automate your existing system, you should review your purchasing policy.
Because your automated PO system will enforce your policy, it’s critical that you understand it and revise and refine it as needed to ensure you’re getting the most out of your purchase order software.
Examining issues such as who in the company has certain permissions and how vendors are chosen can help you optimize your current workflows and integrate an effective online PO system.
Choose Purchasing Software.
It is now time to find the best purchasing software for your business.
Most businesses will opt for e-procurement software because it is easier to manage and everything is backed up.
This type of purchase order control system allows for easier organization, greater spending control, and lower costs.
When choosing a purchase ordering system, it’s critical to look for one with a strong customer service team, especially if you’ve never used a cloud-based PO system before.
While most setups are straightforward, you’ll need someone to rely on when it comes to demonstrating the new purchasing system software to your entire team.
Implementing the System
While it is your choice whether to begin with a completely new purchasing system software, it is best to begin gradually integrating the new software into your business by allowing the most important decision makers at your company to use it first.
They will be able to ensure that the software does exactly what you need it to do without interfering with the entire procurement process.
You can rely on the Bellwether purchase order system to integrate seamlessly into your existing PO process.
Your team may require a brief demonstration, but you will soon be up and running with a fully functional system.
Advantages of a Highly Efficient Purchase Process
It saves money
You will save money and allow employees to do more with their workday because the purchasing system should increase your company’s productivity and efficiency in all aspects of the purchasing process.
Purchase order software also assists businesses in lowering supply costs, reducing administrative costs, and shortening the overall purchase cycle.
Because the best purchase order software allows for defined approval levels, your company will gain control of spending and make budgeting easier.
Managers will have greater transparency regarding spending at all levels and stages of the procurement process.
Businesses can use purchasing software to customize workflows to provide controls for budgeting and thresholds, as well as to create a more refined workflow for each level of the purchasing and procurement process.
The process of automating and creating these workflows saves time, allowing management to focus on developing beneficial vendor relationships.
A Cloud-Based Purchase Order Management System for Your Company
Businesses can access their system from anywhere using cloud-based purchase ordering software, allowing them to review recent purchase orders at every stage of the process while on the go.
Why Are Manual Purchase Order Processing Methods Inefficient?
We see organizations wasting money and time by pushing paper to process purchase orders all too often.
When you run a small business, manual processes appear to be efficient.
However, as time passes and your organization expands, you may find yourself wasting time and money attempting to make an old process work.
There is no data.
Every organization values data, and it is required to make sound decisions.
The purchasing process is no exception; data must be accessible at all times.
However, retrieving meaningful insights is nearly impossible with paper-based, manual processes.
Even if you were successful in extracting data, it would be time-consuming and difficult to comprehend.
Manual purchase orders make the procurement process more difficult.
According to a recent APQC study, manual purchase order processing can cost up to $506.52 per PO.
While this information varies depending on the industry, it means that you could be losing money if you process a PO with a value less than that amount.
The passage of time
In the business world, time and money coexist.
The cost of manually processing purchase orders is due to the amount of time it takes the organization to complete the process.
Your employees are most likely paid on an hourly basis.
As a result, you don’t want them to waste time waiting for a PO to arrive at their desk because your system is inefficient.
Prone to Errors
Human error is common in a manual purchase order process.
Because it is so reliant on human intervention, it is all too easy to enter the wrong number in the wrong place.
A simple typo, on the other hand, can cause havoc.
When you receive a shipment and an invoice, for example, it may appear that the most efficient thing you can do is simply pay the invoice.
However, if you do not ensure that you are purchasing the correct quantity and quality products, you may end up losing money.
Because you have so many tasks to complete in a day, it’s easy to lose track of how much the shipment was for and which products were included.
If you simply pay the invoice, you may be overpaying or receiving an incorrect shipment, forcing you to make another purchase.
What is the solution?
If you want to save time and money on your purchase order process, it’s time to retire the old system and transition to a digital and modern approach: online PO systems.
The key word here is automation.
You will save your employees’ time and money by automating workflows and reducing the time it takes to complete the PO process.
How Do Online PO Management Systems Work?
An automated purchase order system is both efficient and effective.
Here’s an example of how they work so you can see how simple it is to implement a new process and get rid of the old.
Create a Purchase Order
As is customary, you will initiate a purchase request.
Your company creates purchase requisitions and sends them to your vendor so that they can ensure they have the correct items in stock to ship to you.
They will then approve your request to proceed to the next stage of their process.
When a request is approved, the purchasing team converts it to a purchase order and begins the approval process.
The PO will be automatically matched with the purchase request, so you won’t have to go looking for either to continue with the process.
Budget and document checks are also performed so that you know whether or not you are over budget, what the budget is, and if this purchase is necessary for your business.
Cataloging is an important aspect of a successful PO process.
You should have all of your vendors’ catalogs in one system so that you can compare prices.
If you discover that you are trying to make a purchase that is out of your price range, you can compare similar items from your vendor pool.
Now that the purchase orders have been approved, they are forwarded to the vendor.
This is done automatically, so you don’t have to worry about sending it yourself to ensure it gets to the right place.
Once you have received the shipment and the invoice from the vendor, you can perform a three-way match to ensure that the information in these documents is consistent:
- Purchase Request
- Purchase Order
This will help to ensure that neither side made a mistake.
Many businesses make the mistake of simply trusting the invoice they receive.
Because manual processes are prone to error, it is critical to match these documents and ensure that the order and details are correct.
Complete the Purchase Order
The purchase order can be closed once all of the information has been verified and there are no discrepancies in the invoice.
The standard procurement process cycle will then be followed.
Best Practices for Purchase Orders for Small Businesses
Follow these best practices for making purchase orders for your small business without further ado.
Consider using an electronic purchase order system.
There is no one way to issue purchase orders, but you should think about going digital with yours.
Electronic purchasing systems eliminate the need to use manual pen-and-paper orders and properly file these documents for audit season.
Furthermore, these electronic systems not only prevent you from misplacing or damaging paperwork, but they also provide an environmentally friendly alternative to printing all of the documents involved in the purchasing cycle.
Create distinct expense categories based on your budget.
Office equipment, product supplies, and equipment, as well as outside services, are all examples of business expenses.
As a result, establishing distinct expense categories can aid in better tracking your cash flow.
It may also be beneficial to set pricing thresholds so that purchase orders stay within the confines of your company’s budget, such as capping equipment purchases at a certain amount.
Make use of a purchase approval system.
Enforcing an approval workflow can help prevent purchases from becoming out of hand, especially if duplicate orders for the same product are placed.
To avoid situations like this, designate a purchase manager to approve orders before they are submitted to your vendor.
Creating an approval workflow aids in the control of organizational costs and the prevention of financial mismanagement.
Make a vendor database or directory.
Consider creating a spreadsheet directory of all of the different suppliers your company orders from, complete with all of the information required to complete an order, such as address, contact number, and payment terms.
This database can help to speed up the purchasing process by serving as a reference and guide for the best supplier to buy from.
It can even help you decide which vendor to work with if you want to establish a long-term contract.
Create a PO guide for your employees.
When making purchasing decisions on behalf of your company, having a PO guide on hand establishes ground rules and expectations for your team.
Should, for example, employees always choose the lowest-priced goods in order to reduce business expenses?
Should they buy more expensive goods to compensate for quality?
Perhaps you want to impose a specific rule of thumb among your team members to ensure a more consistent purchasing strategy.
In any case, a guide can be used to not only outline procedures for more specific purchasing scenarios, but also to train new employees on how to choose and negotiate with vendors.
What Impact Does E-Procurement Software Have on PO Processing?
Requests that are automatically routed
Purchase requests are made simple with online PO systems.
All you have to do is enter the purchase request details into the system.
According to the defined path, the requests are then routed to the appropriate stakeholders.
Once the request is approved, a PO is generated automatically, with no human intervention required.
After that, the PO is processed through the entire system, including invoice approval and payment.
This eliminates the need for a paper-based system entirely.
You’ll now have immediate access to any purchase order, and archived POs can be retrieved whenever you need them.
You will also never lose a PO again.
Matching that is automated
To ensure that you are not overspending, compare the purchase request, purchase orders, and invoices.
Check that all of the information is correct in all three places.
Three-way matching with online point-of-sale systems requires no human intervention and is done automatically to avoid costly errors.
Manual errors are no longer an issue, so you don’t have to worry about wasting money.
The ability to receive reports and analytics is a significant advantage of switching from a manual to a digital purchasing system.
This data will assist you in understanding what is working well and where inefficiency may be costing you money.
You will have complete transparency and visibility, allowing you to make critical business decisions based on real-time data.
You can also view the current status of any order in real time, analyze vendor performance, and create custom reports.
The Best Purchase Order Software
- Quickbooks – Best purchase order software for Quickbooks users
- Coupa Procurement – Most flexible purchase order software
- Procurify – Best purchase order software for customization
- Xero – Best price for purchase order software
- ManageEngine ServiceDesk Plus – Best purchase order software for IT teams
Below are our reviews and recommendations for the five best purchase order software out there. Each one has its own unique benefits and drawbacks.
The one you ultimately choose might differ from another company. That’s okay. The important thing is you choose one that’s good for your process and needs.
PLANERGY can help you streamline your procure-to-pay process.
This procurement management system, formerly known as PurchaseControl, will assist you in creating POs, managing approvals, and understanding spending.
The SaaS-based spend management tool was created to assist all businesses in better understanding their financial operations.
PLANERGY integrates with a number of leading accounting software products to ensure that your purchase management process is as efficient as possible.
Request: System for purchasing requisitions.
Vendors must be contacted to order pre-approved supplies.
Approve: Approve purchases and keep track of spending limits.
Purchase orders must be created.
Receive: Ensure that goods received from purchase orders submitted match.
Complete transparency into your invoice processing
Order Search and Tracking: Orders have a full audit trail.
Reporting, Planning, and
Investigate: Budget forecasting and reporting
Enhance your workflow by:
Increase efficiency by eliminating time-consuming manual tasks from your processes; eliminate opportunities for error and fraud.
Increase your visibility:
Real-time budgeting allows you to keep an eye on your bottom line.
Get rid of paper:
Reduce your carbon footprint by converting your documents to digital format.
Control business rules:
Configure the software to meet your specific compliance and oversight requirements.
Maintain your safety:
The cloud-based app safeguards all of your data and documents.
Integrations of PLANERGY
- QuickBooks Online
- Sage 50c
PLANERGY is intended to be cost effective for your business by charging per user, all for less than the cost of a latte per week!
In addition, free enterprise level support and onboarding are included in the costs.
The license fee is determined by the total number of users who will use the system.
At an additional cost, modules such as Inventory, Ticketing, and AP-Max are available.
There is a risk-free trial period available.
Approve.com assists businesses in gaining control of their business spending by streamlining approvals, simplifying purchase requests, and providing data-driven insights.
Approve.com has a strong integration layer that helps businesses automate manual processes and keep an electronic record of all purchases, approvals, and purchasing interactions.
- Forms that are adaptable: Create forms that are tailored to your processes and policies.
- Approvers can approve, reject, return, or consult, ensuring that the requisition is properly routed.
- Communication centralized: Save communication between stakeholders directly within the request.
- Mobile and email approvals: Allow approvers to respond to requests while on the go by using email and mobile devices.
- Smart view filters: Use filters to see only what you need to see based on user, vendor, status, and other criteria.
- Attachments to files:
Attach any relevant documents, contracts, or quotes to the request.
- Items received:
Obtain a three-way match by allowing requesters to easily confirm that goods have been received.
Approve.com’s Target Audience
- Companies that provide services
- Companies in the technology sector
- Medical care
- Institutions of finance
Pricing at Approve.com
Approve.com starts at $2,000 per month.
The pricing model is SaaS–a platform fee is charged for allowing unlimited users, with a built-in “pay as you scale” model for approved purchase requests and vendors.
A free trial is available.
There is no such thing as a free version.
Relationship Between a Vendor and a Buyer
It is critical that you have a good working relationship with your vendors.
If you have a bad relationship with them, they may raise your prices in comparison to their other buyers.
When there is a problem between your company and its vendor, it is ultimately your company that suffers.
You can have a more pleasant, mutually beneficial relationship with your vendors if you use purchase order software.
Even if they made a mistake, it is your responsibility.
For example, you might receive an invoice for less than the amount specified in the purchase order.
If you do not notify them, they may discover it later in their own paperwork.
This may lead them to believe that you are no longer trustworthy, even if you are unaware of it.
You rely on your vendors to provide you with the products you require at the prices you require.
Maintaining a strong relationship can be aided by an online purchase order system.
What Kinds of Companies Require Purchase Order Software?
We believe that purchase order software will benefit all businesses, large and small.
Some are weaker than others.
These are ideal for those who want to make the switch to a digital system but aren’t sure how comfortable they are with digitizing everything.
Other software is more robust, providing all of the advantages of purchase order software and automation.
You’ll be amazed at how e-procurement software transforms your purchasing process and saves you both time and money, no matter what industry you’re in or how large your organization is.
- Made with ♥️ by OptiMonk 20% off for your feedback!
- BPM software is 100% web-based and is the proven purchase order management software for small to midsize businesses.
- Access anywhere, anyplace 100% web-based software offers flexibility and customization for your specific needs. (bellwethercorp.com)
- In a marketplace where fewer than 40% of small businesses (SMBs) survive past a decade, it takes dedication and attention to detail to thrive. (planergy.com)
- You pay just 2.9% + 30¢ for each invoice paid securely online.
- To put this into context, this would represent an additional 0.36 to 0.9% per transaction for a business with $200,000 of card sales.
- Square’s fees are just 2.6% + 10¢ per swipe, chip card dip, or NFC payment.
- Invoices are always free to send and cost 2.9% plus 30¢ for each invoice paid securely online.
- The cost for Card on File is 3.5% plus 15¢ per invoice. (squareup.com)
- Ensure that 100% spend is classified per taxonomy to enable real-time spend visibility and analysis (cllax.com)