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How to implement an Electronic Purchase Order System (in 7.5 days)

  • By ProcureDesk
  • January 12,2023
  • 10 min read

How to implement an Electronic Purchase Order System (in 7.5 days)

How To Implement An Electronic Purchase Order System (in 7.5 days)

By implementing an Electronic purchase order, you can cut the time spent on processing purchase orders by up to 50%.

Here are the typical results of our clients who have moved from a paper-based purchase order process to an Electronic purchase order system:

  1. Reduced cycle time by up to 30%.
  2. Reduced cost per PO by up to 50%.
  3. Reduced product stockouts by 20%.

Manual vs Paper Based Purchase order

In this article, we are going to show you a step-by-step process on how to implement an electronic purchase order system. Specifically as a buyer:

  1. How to build the business case for the electronic purchase order process.
  2. How to define your key requirements and what to look for in a purchase order automation tool.
  3. A step-by-step walkthrough of a typical implementation process.

But before you get started

Download our purchase order system checklist


And then, follow along to see how to use this checklist to implement an electronic purchase order system.

What Is An Electronic Purchase Order System?

An electronic purchase order system automates the time-consuming purchasing process.

The purchasing process starts from a requisition or request for purchase to issuing the purchase order to the vendor.

A digital purchase order system automates your manual purchasing process. It provides you with a better process for purchase order management. Aside from that, it only uses electronic documents to ensure your transactions are paperless.

If you use emails and spreadsheet templates to create purchase orders, an electronic purchase order can significantly reduce the time it takes to issue a purchase order.

An electronic or digital purchase order system generally covers the following processes:

Electronic purchase order process

  1. Allow a requester to create a purchase request easily.
  2. Put the request on route so the appropriate stakeholders in your organization can begin the approval process.
  3. Convert the request into a purchase order document.
  4. Dispatch the purchase order to a vendor.
  5. Allow the employees to track purchase orders from acceptance or vendor acknowledgment to product delivery to the dock.
  6. Allow employees with the correct access permissions to mark a product as received.
  7. Sometimes, offer an AP functionality to upload and match the invoices with the purchase orders.

Why Do You Need An Electronic Purchase Order System?

Wondering why you need a purchase order system?

By investing in a purchase order system, our clients have seen the following benefits:

Benefits of an electronic purchase order system

Better Cost Control And Reduced Expenses

If you are concerned about controlling costs, then a purchase order system provides a mechanism to proactively give you complete control of your cost within the organization.

With a purchase order system:

  1. You can review the purchase request and decide if the purchase is required.
  2. You can control the timing of the purchase to better match your cash flow/ cash in the bank.
  3. Ensure that the purchase request is authorized at the appropriate level in the organization. For example, all larger purchases are approved by a senior management team member.
  4. Avoid surprise invoices because the purchase orders are approved before the purchase, compared to manual processing.

Reduced Cycle Time For Your Purchasing Workflow

A purchase order system reduces the overall cycle time because it gives conditional formatting tailored fit for your business compared to a traditional purchase.

Our clients who utilize purchase order automation software achieve an average approval cycle of 30 minutes.

This cycle time assumes the total time it takes for the purchasing team to approve the requisition.

Because the purchase order system makes it easier to approve the purchase order request and even gain vendor details, the request gets approved faster.

We have worked with clients where it used to take days to get the request approved.

It was simply a case of employees assigned to core purchasing operations getting too many emails daily and the approval requests getting lost in the sea of emails.

Reduced Cost Through Automation Of Manual Processes

The average cost of issuing a purchase order can easily go up to $500 per purchase order.

The cost generally includes the following

  1. The cost of the time it takes to create a requisition and send it for approval.
  2. The time procurement managers spend reviewing, asking questions, and approving or rejecting the purchase request.
  3. The time it takes to review the requisition data and then convert that into a purchase order.
  4. The time it takes to send the purchase order form to the vendor.

Our studies found the purchase order cost to be close to $60/purchase order.

So if you send 100 purchase orders a month, that is an average cost of $6,000.

You can reduce this cost to $3,000/month with an automated purchase order process.

Better Cash Flow Planning

A purchase order system helps you see all your spending in a bird’s eye view in a central location. Thus, bringing your company better cash flow planning.


  1. You can track all purchase orders and other digital documents relevant to the purchase to know the total committed value.
  2. As a business owner, tracking what has been invoiced against the purchase order and the remaining commitment is easier.
  3. You can review all your spending and payment terms. Thus, making it easier to know which payables are due on certain dates.

Take note that the greatest advantage from a cash flow perspective is the ability of your team to review your data and even negotiate terms with your suppliers. that work best for your business

For example, if you are paying invoices on receipt, you could ask for payment terms like Net 30 or Net 60 and reduce the cash flow needed at any time.

How To Implement A Purchase Order System In 7.5 Days

Ready to implement an electronic purchase order system?

Great, read on for a step-by-step process for purchase order automation.

And yes, you can do that in 7.5 business days!

Step 1: Build your business case for the electronic PO process

There is no fun in finding an awesome product to automate the purchase order system and later having it shot down by your Boss!

Unless you are the Boss 🙂

So we recommend that you build a business case for automation before you invest time in finding the best solution for your purchase order needs.

Here is a simple process to build a business case for implementing a purchasing order system:

Business case for purchase order

All you need to know is the average purchase order volume.

Let’s say you create around 100 purchase orders monthly that is 1200 per year.

Total POs per year: 1200
Cost per PO: $60

If you want to calculate your own cost, here is the detailed process for calculating the purchase order cost.

The total annual cost for purchase orders: $60 x 1200 = $72,000.

Now let’s say that you can reduce the cost by half by implementing a purchase order

So the new annual cost is $36,000 or $36,000 annual cost savings.

Cost of the purchase order system:

The purchase order system costs $500/month or $6,000/year.

So with an investment of $6,000, you can save $36,000 per year.

Return on Investment = $36,000/$6,000 = 600%

You can make this more complicated, but if you are a small company, that is all the math you need to build a business case for procurement automation.

Step 2: Select the vendor to automate your purchase requisition and procurement process

The next step is to find the best purchase order system with the best user interface and key features that will fit your organization.

You don’t need 10 demos from 10 different vendors. But list the top 3-4 solutions you would like to see.

If you are curious if ProcureDesk is the right solution, Just click here to schedule the demo.

I would suggest documenting high-level use cases so that they easily screen solutions. Here are some sample use cases for an electronic purchase order system:

  1. Ability to have a configurable approval process to configure the tool per your approval authority matrix.
  2. Ability to support catalogs, including punchout catalogs, so your employees can easily create requisitions.
  3. Ability to monitor and track the purchase order through its life cycle. For example, tracking vendor acknowledgment, shipment information, etc.
  4. Management dashboard so that you can easily track cash flow requirements.
  5. Detailed reporting for granular spend visibility.

If you need a list of key features, download the purchase order checklist.

Step 3: Setup your approval hierarchy and setup the approvals

Now you have selected a system, let’s talk about the basic configurations of your centralized access. We will use ProcureDesk as an example, but you can follow this process with any system you choose.

Connect with the Accounting system

The first thing to do is to connect your purchase order system to your accounting system so that you can pull all the master data required while creating transactions. This will give you quick access to your audit trail.

For example: Let’s say you use QuickBooks as your accounting system and use ProcureDesk for an electronic purchase order system.

You can connect to QuickBooks Online or QuickBooks Enterprise in a few clicks.

Here is an example of how easy it is to connect to QuickBooks:

Import data to get started

After you have connected the purchasing system, import the following or the equivalent of the following data from your accounting system

  1. List of suppliers and their locations.
  2. Chart of accounts.
  3. Different job projects.
  4. Classes, department codes, locations, etc.

Once this data is available, you can move to the next step.

Chart of accounts

Set up an approval matrix

For most organizations, a key objective for setting up an electronic purchase order system, besides improving supplier relationships and boosting supplier management, is controlling spending.

To control spending, you must define who can approve up to what amount in your organization.

Here is a sample approval matrix:


There are two different strategic initiatives for setting up an approval matrix.

You either set it for maximum accountability or you set it up for maximum control to implement user-specific permissions. Here is what we mean here:

If the senior management wants to see every step in the process, then the approval matrix is set for maximum control. More accountability will be set for your mid-management level if they have more authority in the approval process.

You have shifted the accountability within this processing time down to the managers instead of control being with one person.

Our recommendation is always to shift the accountability to mid-management. Leverage the 80-20 principle to focus on only large transactions contributing up to 80% of spending.

Set up approval workflows

Next, let’s set up the workflow.

You can now decide how your approvals will work based on the combination of your approval matrix and other factors.

For example, if you want to send it to the manager for approval, then here is a simple workflow:

approval_workflow_with HR manager

However, if you want to set up approvals based on the amount and then route them to different individuals, then the workflow could look something like this:

approval_workflow_names user

Configure the PO template

Next, configure the PO template so that you can control what gets printed on the purchase order and what the purchase order would look like.

The idea is not to ensure that all data you need to send to the supplier is printed on the purchase order.

For example, Item name, description, Unit price, etc.

Here is an example of a purchase order template:

purchase order template

This is one of many pre-configured templates available with ProcureDesk, so you can choose the best templates.

Step 4: Setup basic catalogs and any internal catalogs

Catalogs make the purchasing process easier.

To see the step-by-step process, read more vendor catalogs here.

When it comes to deciding on your catalog strategy, there are two things to consider:

  1. If the vendor has a large spread of items to choose from, it makes sense to go with a catalog hosted by the vendor.
  2. On the other hand, if you only buy a handful of items from the vendor, it is probably best to set up an internal catalog.

Internal catalogs:

Internal catalogs are catalogs that are set up and managed by you.

Internal catalogs make sense when you only purchase a limited set of items from a vendor, and the pricing is fixed for a certain amount of time. For example, the price is revised every 6 months.

Here is an example of how the internal catalog works:


Punchout catalogs

With a punchout catalog, the vendor provides you with a link to their website. The website account is unique to you because that is how the vendor recognizes your special pricing.

Ensure that your purchase order system partner supports you in getting these vendors onboarded. Otherwise, it could be quite a cumbersome process.

With a punchout catalog, your employees get the online shopping experience without the need for you to manage catalogs.

Here is an example of how an Amazon punchout would work:


It is the same experience as you would use Amazon.com for your purchases. The only noticeable difference is that it now has a “Submit for Approval” button.

This allows the request to be approved before Amazon processes the purchase order.

Punchouts are very effective for large vendors because you don’t have to worry about managing the catalog and dealing with pricing changes.

Step 5: Work with the A/P team [optional]

Even if you have automated the purchase order process, the Accounts payable team still needs to match the invoices with the purchase orders.

That could be quite a cumbersome online workflow.

We will not detail the complete accounts payable process here. Still, if you would like to reduce the time spent on processing invoices, you should consider implementing an integrated purchase order and invoice process.

With an integrated purchasing and invoicing system, you can automatically match the invoices with the purchase orders, skip Paper-Based Systems, identify any issues and then route it for approval.

3-way invoice matching

If you are interested in learning more about the invoice match process and decreasing the risks of human errors, you can read more about it here:

Accounts Payable solution

Implementing a paperless purchase invoicing system

By implementing an Accounts payable automation tool, a purchase order system, and digital forms, you can reduce the time spent on processing invoices by up to 35%.

Step 6: Test Run the system and go live

You have set up the approval chain and catalogs. The next step is to test the system and then go live.

Here is what we recommend:

Test all possible scenarios

Before you roll out the product to the entire procurement team, test the key scenarios.

For example:

Are all workflow scenarios configured properly?

Or Does all levels of the approval tasks are being triggered as per the defined conditions?

You also want to test if the pricing on punch-out catalogs is correct. If the vendor provides discounted pricing, that should also be available on the punch out.

If you are building internal catalogs, check all the pricing and other relevant information.

And last but not least, make sure that supplier contacts are correctly loaded in the system.

One of the advantages of a purchase order system is that it can automatically send purchase orders to the vendors.

For that, you need to have the correct supplier information.

Include a user champion

This step might only be applicable if you are rolling this to a large team. This step is not required if you are only a team of 3-4 people.

The idea of an authorized user champion is to ensure that you have representation of users in the design’s entire purchasing process.

That way, you don’t have to wait till you go live to figure out user issues. You can get real-time feedback, which can greatly help with adoption.

Record training and conduct multiple training

Next, conduct user training and go live with the product.

A few points on training:

  1. Keep training short – anything more than 30 minutes is generally a bad idea because your employees might not have all the information simultaneously.
  2. Focus on the top 2-3 use cases they would use every day.
  3. Provide a cheat sheet of common functionality they would use.
  4. Record your training so your team can use it as a learning resource.

Track adoption

The best purchase order system will not help if you don’t track adoption.
By tracking adoption, you can determine whether you would get the ROI from this solution.

Tracking metrics doesn’t need to be complicated; it can be as simple as the following:

  1. How many purchase orders are being created per week.
  2. How long does it take to approve a purchase order request?
  3. How well the vendors are adapting to the new process. Do they see any challenges, and so on?

So there you have it, a complete step-by-step process for implementing an electronic purchase order system.

Now your turn!

By implementing an electronic purchase order system, our clients have seen the following benefits:

  1. 30% less time spent on processing purchase order requests.
  2. 20% improvement in lead times because they can better track their purchase orders.
  3. 50% improvement in the approval cycle time, POs take less time to approve with more accurate information.

You can now build an electronic purchase order system using these steps for your financial processes or implement ProcureDesk, a purchase order software designed to help you automate the manual purchasing process. If you are curious how ProcureDesk can help you eliminate the manual purchase process, click here to schedule a demo with one of the product experts.

What you should do now

Whenever you’re ready… here are 4 ways we can help you scale your purchasing and Accounts payable process.

  1. Claim your Free Strategy Session. If you’d like to work with us to implement a process to control spending, and spend less time matching invoices, claim your Free Strategy Session. One of our process experts will understand your current purchasing situation and then suggest practical strategies to reduce the purchase order approval cycle.
  2. If you’d like to know the maturity of your purchasing process, download our purchasing process grader and identify exactly what you should be working on next to improve your purchasing and AP process.
  3. If you’d like to enhance your knowledge about the purchasing process, check out our blog or Resources section.
  4. If you know another professional who’d enjoy reading this page, share it with them via email, Linkedin, Twitter.