No one likes them, they are annoying and can be a nuisance. (Actually that’s not true).
As your organization continues to grow in employee size and revenue, you might realize at some point you need to start using purchase orders. What most people don”t realize is the importance of tracking purchase orders. 30% of all invoices are disputed and accounting departments are usually left busy dealing with the constant mess. Purchase Orders ensure internal controls and legal protection with suppliers.
So executives, like a CFO or CEO, might start mandating that purchase orders be used. Questions start to arise. How will purchase orders be created? Hopefully not by paper, an excel sheet or with a log book (which creates a whole plethora of headaches and issues in itself). You naturally look at your accounting or ERP system to create purchase orders and to issue the P.Os. But while ERP systems and accounting modules are useful, providing many functions, they usually suck at managing procurement and purchase orders.
- Many departments and managers are involved with purchasing! Marketing does purchasing for conferences, IT does purchasing for computer equipment, and operations managers do purchasing for construction sites and manufacturing floors. Do they have access to or know how to use SAP, Quickbooks, Netsuite, Dynamics or Sage? Likely not, they neither have the time to learn nor does your company have the dollars to spend for expensive licenses. So they email or call accounting and this initiates a complicated, quasi manual process.
- Even before a purchase order is created, who has authorized the purchase and how is this tracked? Who is accountable? Guess what, your accounting system can’t do this or do it easily. So once again, everyone is left wondering what is going on and departments become information silos with excel sheets and emails. Accounting gets constant emails and calls, and accounting will have to hunt down and track signatures.. which lets face it, shouldn’t be their job.
- A purchase order is sent out by accounting or purchasing for a department using an accounting system. The goods or services arrive…somewhere. Accounting receives an invoice. How does accounting know whether all delivery terms are met and payment should be sent? They spend a lot of time being internal detectives. Again, not their job.
The big reason no one likes purchase order is not the purchase order itself per se, it’s the cumbersome, administrative intensive and time consuming process around them. From who needed the purchase, to who authorized, to taking into account budgets, to whether it was received, your accounting systems suck at this or can’t do this in a fashion that makes it easy and simple for all players.
Luckily, there are alternatives, like cloud based e-procurement software. The trick is finding and implementing one within your organization. Luckily Procurify models it’s self after user friendly consumer facing applications – meaning that implementing it, and using it is (almost) as easy as downloading an app for your smart phone. Your employees will thank you for saving them from paperwork and your boss will thank you when he sees next months profit and loss report.