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6 Steps To Automate Your Purchase Order Process

  • By ProcureDesk
  • December 07,2023
  • 10 min read

6 Steps To Automate Your Purchase Order Process

purchase order process

When your company starts to scale up, your manual procurement process might start to become a problem.

We’re talking about handling manual payment terms, managing binding contracts, and other finance activities that may start to be time concusming.

For example if you’re using spreadsheets, you may start to notice how you may suffer from slow and error-prone processes. If that’s the case, it’s about time you consider using a purchase order software.

In this guide, our goal is to introduce you to an actionable plan of using purchase order process automation to help you save at least 50% of the time you spend on handling legal documents, creating purchase requisitions, and the entire process involved in the purchasing process.

If you’re ready to join the purchase order software bandwagon, then get ready to dive in!

If you’re looking for a purchase order software to help you automate your company’s business operations,  you might want to explore on ProcureDesk. We have a team of experts who can walk you through how this works. Click here to see it in action

What Is A Purchase Order Process?

A purchase order process refers to a series of steps your business should take to efficiently manage acquiring your goods and services.

It involves several key stages, from identifying a need to fulfilling a payment. Here are the typical steps of a purchase order process:

The purchase order (PO) process is a series of steps businesses take to efficiently manage acquiring goods and services. It involves several key stages, from identifying a need to fulfilling payment.

Over the next sections, we’re going to break down the key steps to a purchase order process. But to help you gain a basic understanding, here are some of the basic steps involved in a purchase order process:

  • Purchase Requisition
  • Approval
  • Request for Quotation (RFQ)
  • Vendor Selection
  • Purchase Order Creation
  • Order Confirmation and Tracking
  • Goods/Services Receipt
  • Three-Way Matching
  • Invoice Processing and Payment
  • Record Keeping

What Is A Purchase Order Software?

Purchase order software refers to a digital platform designed to streamline and automate the standard purchase from requisition to payment.

It helps business of all sizes manage their standard purchase and other purchasing activities in the purchasing cycle, making it more efficient and effective.

Here are some of the features a PO software can do:

  • Blanket purchase
  • Three-way matching
  • Creating and sending purchase orders
  • Invoice tracking
  • Purchase requisition approval
  • Inventory management
  • Integrate with accounting software
  • Generating reports & dashboards

In short, the purchase order software streamlines a company’s procurement cycle. It aids in the enhancement of buy order management procedures, the streamlining of approval workflows, and the tracking of accepted and rejected purchase orders.

As an essential part of the purchase order process automation, using a purchase order system allows organizations to maintain purchase orders in one place, increasing the visibility of financial expenditures, providing audit trails, and eliminating the error-prone drafting of purchase orders in Excel spreadsheets.

Related: Purchase Requisition Vs Purchase Order

Why Is It Important To Implement An Automated Purchase Order Process?

Because there are so many moving elements, the purchase order process can be difficult to traverse manually. Staying organized, monitoring expenditures, and fostering openness across departments all need software solutions when going through purchasing of products.

When a company opts for procurement automation, there are numerous advantages to be taken into consideration.

So, why is it important to use purchase order software for the purchase order process?

Time Efficiency

One of the best reasons to utilize purchase order software is that it reduces staff workloads by eliminating manual administration.

This allows them to focus on value-related duties, such as risk management and creating relationships with ideal suppliers and customers.

Choosing the best purchase order software can help you save from 30 to 50% of the time invested in the procurement process and purchasing of products. Just imagine how much more efficient you and your team will become!

Higher Reach Of Ideal Suppliers

Purchase executives’ workload is reduced by automating procurement operations such as vendor registration, sending RFQs, creating automated Comparative Statements, and automating the approval during the purchase process.

This allows them to concentrate on their main tasks, such as contacting new vendors and identifying acceptable suppliers for their procurement requirements.

Thus, automation of the purchasing cycle has a significant favorable impact on supply lead time, quality, and cost, among other things.

Streamlined Purchase Process

Similarly, using procurement software offers total insight into all procurement processes and operations, helping you diminish the inefficiencies related to paper-based operations.

For companies struggling with first-generation automation issues or lacking a procurement team in the first place, using purchase order software will diminish the usual backlogs, leading to improved relationships with suppliers.

Increased Transparency

When you work with the best purchase order software for a small business, the prices are more transparent, maverick buying is avoided, and your company may easily employ preferred supplier networks.

Moreover, the buyer and seller have a better power balance since information is much more readily available.

At the same time, the procurement software facilitates data collecting by better organizing and managing transaction information.

With the information, you may view and evaluate purchasing trends, use buying influence, and uncover chances to consolidate suppliers.

Prevents Human Errors

Everything can be saved and preserved electronically with an e-procurement system. It’s also easier to check for problems with electronic paperwork because it’s more simplified.

Additionally, old orders can be more easily referenced, saving time and ensuring accuracy by comparing orders to ensure new ones are correct.

Related: FREE Purchase Order Template Google Sheets [Ready To Use]

6 Steps To An Automated Purchase Order Process

The importance of using purchase order software to have an effective and efficient purchase order process is clear. It saves you time and keeps the process streamlined.

By now, you should have made up your mind, and you should have realized that procurement automation is the way to go.

This is why, through this guide, we will help you smoothen the transition to e-procurement. If you read carefully and understand how the system works, positive results will surely come.

It is time to save time.

Let’s go over the steps of fan automated procurement journey, shall we?

Let’s start this automated procurement journey, shall we?

Step 1: Create The PO Request

Purchase requisition

The first one of the purchase order process steps is, as expected, creating a PO request.

If you have no experience in procurement, “What is a PO request?” might be the first question that comes to your mind.

Worry not; we’ve got you covered! A purchase order request is an official document issued by a buyer that commits to paying the seller for acquiring particular items or services to be provided in the future.

As you can see from the image above, you can see the quote, the description, the quantity, and the suppliers for that specific order. With the help of the dashboard, you can also check whether the supplier has responded to your request or not, as well as the status of the PO request throughout the whole purchase order process.

Basically, in this very first step, all you need to do is take a look at the vendors’ catalog and choose the product or service that best satisfies your needs.

Here, we have a small tip: a good supply catalog can influence the whole buying experience.

When you fill in the PO request, you can browse or search catalogs to find the proper product or service instead of remembering what information to input. This is one of the first tricks that will save you from wasting your invaluable time.

To have a quick look, this is what a catalog would look like:


If you need any help designing internal and external catalogs, please take a look at our article on the topic.

But, in the meantime, let us recap how you can use vendors’ catalogs in your favor:

  1. Reduce friction by offering all product facts upfront, including a picture, description, supplier, and pricing information.
  2. Limit the choices and direct people to the best one.
  3. If users can’t locate what they’re looking for, provide them with clear directions.

Once the PO request is out, it’s time to move to the second step.

Step 2: Design The PO Workflow

You’ll learn how to set up the PO approval workflow in this next stage.

And more importantly, you will learn how to do it efficiently.

If you set up the process correctly, you should be able to approve 80% of total requests in under an hour and the remainder in over an hour.


This is what you are trying to achieve, right?

Getting a deeper knowledge of your expenditures is the first step to a successful purchase approval process.

So, what do you need to take a look at? Purchasing categories, the average budget expenditures, the level of accountability and budget control, or your company’s goals are just some factors to consider.

You may quickly route the request to department budget owners using customizable workflows. They will have comprehensive insight into what is being acquired.

This is how a flexible workflow will look like:


You can choose from numerous versions of PO approval flow charts, so design one that suits your company best.

However, no matter the direction you choose, follow these criteria for creating a successful purchase order approval process:

  1. Examine your purchase history to learn more about your buying habits.
  2. Design your approval procedure around your buying history.
  3. Keep it straightforward at first, then improvise depending on input from users.
  4. Minimize the need for top management approval.
  5. Consider additional requirements, such as the necessity for an audit department.

Well, now it’s your time to shine.

You can build the best purchase approval workflow by downloading our approval process template.

Step 3: Send A Dispatch PO To The Vendor

After the PO request is validated, the purchase order system should automatically send the purchase order to the vendor.

This is what the typical purchase order will look like:


So, what would normally take a couple of hours when processed manually can now get in your vendor’s inbox in just a few clicks.

Just think about how much time you have saved by now.

Welcome to the efficiency of e-procurement!

Once this PO is sent by the procurement software, you can rest for a while: the supplier is taking the lead during this step.

At first, the supplier needs to recognize this purchase order for it to become legally binding.

But, how do you know if the vendor acknowledged your order? The answer is, as expected, one click away. You may follow the status of a purchase order throughout its life cycle using the purchase order tracking feature.

Here is an example of what the purchase order tracking looks like:


Up next, the vendor dispatches the goods or service providers from their end, ensuring everything is ready to be delivered to the buyer. That might imply some internal quality checks.

[Bonus]: Budgeting is an important step in your procurement process. Do you want to learn how to calculate your own purchase order cost? Please review our article on the topic and download our PO Cost Template!

Step 4: Receive Your Order

The fourth step of the purchase order process is when you have been waiting. The time has come for you to receive your order — this being, in fact, the main purpose of the procurement activity.

Thankfully, due to the already presented tracking feature, you don’t have to worry about not receiving the order anymore. You only have to check its status and wait for the package.

What you need to do right now is to perform a quality check. Is the order up to your expectations? Did you receive everything that you were supposed to receive in the first place?

A product quality inspection is a process that involves inspecting and testing a product’s numerous features to ensure that it fulfills pre-determined requirements.

If everything is according to plan, we can continue the purchase order process.

If not, you need to check the guarantee conditions and confirm with the supplier that you can either change the product or are eligible for reimbursement.

After the order is delivered, you will create a receipt.

Create Receipt

The receipt procedure enables businesses to determine whether or not a supplier has delivered the product. This feature will be useful in the next step, so keep reading!

Step 5: Receive The Invoice


After receiving the order, the next natural step in the purchase order process is to receive an invoice from the vendor.

Many businesses struggle because they lack an established method for accepting invoices.

You may have paper invoices or invoices issued directly to stakeholders rather than the AP department. As a result, scanning invoices and following up with various stakeholders to acquire supplier information takes more time.

The next step is to secure payment approval for invoices.

If you use a purchase order system, with the help of the receipt, the AP department can process invoices by comparing the invoice to what was delivered and bought.

In practice, you can match the purchase order and the invoice (also known as a 2-way match) or the purchase order, invoice, and receipt (also known as a 3-way match).

You don’t need more approvals if the invoice matches the PO and there is a receipt confirmation.

If you need to get the invoices approved, however, emails become a problem.

Thankfully, you can reduce approval time by using a system-driven exception approval process rather than emails to approve exceptions.

In this stage, features such as QuickBooks Integration will be useful.

Step 6: Process The Payment

Automated payment status update

As expected, each purchase should end up with you paying for the goods or services purchased.

This is why the payment to the supplier is the final step of the purchase order process automation.

Payments can be processed directly in QuickBooks or through third-party platforms like Bill.com.

Once the payment has been made, the invoice payment data must be transmitted to the AP system so that other users may see that the invoice has been paid.

What else does this quick payment matching bring to the procurement software? The benefits of synchronizing the payment status are twofold:

  1. Employees may check invoice status independently, which decreases the amount of payment status questions to the AP department.
  2. It clears the AP backlog so you can concentrate on what needs to be done.
  3. ProcureDesk syncs payment information from QuickBooks automatically, so you don’t have to track what’s been paid and what hasn’t.

With this in mind, the steps covering the purchase order process have finally ended. All you have to do now is to choose the desired procurement software. And we are here to support you.

[Bonus]: Centralized purchasing is a purchasing approach in which procurement choices and implementation are centralized, rather than each branch making its own purchase decision. Learn more about centralized purchasing!

How Can ProcureDesk Help?

Invoice Approval Workflow

With the ProcureDesk invoice approval workflow engine, you don’t have to worry about routing invoices for review and approval.

Using the customized invoice approval workflow engine, you can create your custom workflow and automate the approval process.

Whether you need to route rent payments for approval or need someone to approve shipping costs, the system takes care of that for you.

You can set up workflows based on the following:

Types of invoices, for example, pre-paid invoices, rents, standard invoices for material and service purchases.

  1. An approval workflow based on the invoice amount and your authorization matrix.
  2. An approval workflow based on the different cost codes, GL codes, etc.
  3. An approval workflow based on the departments.

These are some examples of how you can set up your workflow.

Here is an example of how easily you can set up the approval workflow for invoices:

Setup invoice approval workflow

Invoice Exception Management

You can decide how and when to route invoice exceptions for approval with smart invoice exception management.

Don’t want the system to route every invoice exception for approval?

No problem – just set up the tolerance levels, and the system would automatically take care of that for you.

You can also configure if the system should consider shipping and taxes in the invoice exception process.

Here is an example of how you can set up the invoice matching tolerance for your invoicing process:


Electronic Invoices

Want to make your invoicing process more efficient?

Then implement electronic invoices with your large trading partners.

With electronic invoices, the trading partner or supplier sends the invoice electronically using electronic invoices standards like cXML.

The supplier automatically posts the invoice electronically with an electronic invoice, and there is no email involved.

The invoice is submitted faster, and that significantly reduces late payment fees.

When the invoice is processed faster, you can take advantage of an early payment discount.

You can choose automated matching and processing so that the process is entirely hands-free.

With electronic invoices, you can reduce the chances of duplicate invoices and duplicate payments.

All the AP team has to do is to pay the vendor.

We have implemented electronic invoices with prominent vendors like Amazon, CDA, Staples, Home Depot, to name a few.

Here is an example of an electronic invoice:

approved supplier invoice

If you want to explore more on the features of ProcureDesk, we have a team of experts who can walk you through how our tool works. Click here to see it in action

Benefits Of Automating Your Purchase Order Process

Automating your purchase order (PO) process within your purchasing department can help your accounts payable team streamline and optimize your procurement workflow.

Here are some of the advantages of automating your purchase order process:

Faster Processing

Automation reduces manual handling and processing time, enabling faster creation, approval, and fulfillment of purchase orders.

The best part is that your accounts payable department can skip the paper trail!

Real-Time Updates

Automated systems provide real-time visibility into the status of purchase orders, reducing delays and improving overall efficiency.

Increased Cost Savings

Automation minimizes the risk of human errors throughout the purchase order procedures, such as manual data entry, calculation, and approval process; it’s easy to say that you can save costs by skipping these discrepancies and corrections.

As a result, your company experiences an optimized spending, helping you enforce budget control, preventing overspending and ensuring adherence to procurement policies.

Improved Accuracy

By eliminating manual errors, you can ensure that your purchase order process flow remains accurate and consistent.

Automated systems can also perform data validation checks to ensure that the information (ex: delivery dates, unit price, etc) entered meets predefined criteria, reducing the likelihood of errors.

Better Visibility And Tracking

Automation provides real-time visibility into the procurement process, allowing stakeholders to track the status of orders, deliveries, and payments.

This makes it easier for your procurement team to have audit trails on your purchase requests, purchase orders, and changes and even maintain compliance with regulations.

Streamlined Approvals

Automated workflows can route purchase orders for approval seamlessly, reducing bottlenecks and speeding up the approval process.

Aside from that, digital approvals and signatures can be integrated into automated systems, eliminating the need for your accounting team to spend time on physical signatures and expediting the approval cycle.

Supplier Relationship Management

Automated systems can facilitate supplier communication by sending automatic notifications, updates, and alerts, fostering better relationships.

Because of streamlined processes, your company can work on faster invoicing and payments, which can lead to strengthening supplier relationships- benefiting the binding document of your contract purchase.

Strategic Decision-Making

Automated systems collect and store data related to procurement activities, providing valuable insights that can inform strategic decision-making and optimize future purchasing strategies.

Aside from that, access to historical data allows organizations to analyze spending patterns, negotiate better deals, and identify opportunities for cost savings.

Compliance And Accountability

Automation helps enforce compliance with procurement policies and regulations, reducing the risk of non-compliance issues.

Automated systems can also create a clear trail of actions for any digital purchase and electronic purchase, making it easier to identify responsible parties and hold them accountable for their roles in the procurement process.


Automated systems are scalable, allowing organizations to handle increased procurement volumes without a proportional increase in manual effort.

They are also easily adapted to changing business needs and evolving procurement requirements of your business!

Debunking Myths: Is The Purchase Order Software as Expensive as People Say?

Oftentimes, small businesses associate using purchase order software with a large financial investment.

But is the traditional purchase order process cheap in the first place?

Manual purchase orders may cost anywhere from $35.88 to $506.52, depending on the company’s sector of activity.

Using purchase order software may help businesses save a lot of company money. While the entire cost per purchase order varies by company, procurement automation has the potential to save up to 75% on every purchase order.

So, the purchase order software is not a liability on your financial statements.

It is an asset that will generate a high return on investment.

Moreover, procurement automation plays an important role in the cost optimization of the purchase order process. As operating expenses have decreased, so have the costs of purchasing and selling and the obstacles to entry into a market.

Case Study: How Indiana Beach Got The Best Results While Automating Their Purchase Order Process

We get it. Sometimes, it is harder to change how a company does things completely. This can also happen when considering automating your purchase order process.

To smoothen your decision-making process, let us introduce you to the short case of Indiana Beach, an amusement park in Monticello.

Throughout the years, they faced numerous challenges with their initial purchase order process, especially when scaling manual processes.

The team had to devote significant effort to matching incoming invoices to purchase orders.

Thankfully, the finance team rapidly recognized they needed to automate the process for their development.

That was when they realized their need for the best purchase order software. Immediately after they started using ProcureDesk, the Indiana Beach team could scale operations using automation to meet the operation’s objectives.

By now, it’s quite clear. In 2022, procurement automation is the way to operate as a company. But how can you end up in Indiana Beach’s shoes?

It’s time to understand the depths of using purchase order software!

[Bonus:] To stay on top of your procurement game, one must constantly gather information. Please look at our checklist before investing in a purchase order software!


What Is A Purchase Order?

A purchase order (PO) is a formal document issued by a buyer to a seller, signifying an intent to purchase goods or services. It acts as a binding agreement between the two parties, outlining the specific details of the transaction, including:

  • Items being purchased
  • Quantities
  • Prices
  • Delivery terms
  • Payment terms
  • Any other relevant information

What Information Needs To Be Included In A Purchase Order?

A standard purchase order typically includes the following information:

  • Purchase order number: a unique identifier for the order
  • Date: the date the PO is issued
  • Vendor information: name, address, contact details
  • Buyer information: name, address, contact details
  • Description of goods/services: including specifications, quantity, and unit price
  • Delivery date: expected date for delivery
  • Payment terms: when and how payment will be made
  • Terms and conditions: any specific agreements or requirements

Main Types Of Purchase Orders?

There are several types of POs, each with its purpose:

  • Standard purchase order: the most common type used for ordinary purchases
  • Blanket purchase order: used for recurring purchases from the same vendor
  • Planned purchase order: issued for goods or services required in the future
  • Rush purchase order: used for urgent purchases requiring immediate delivery

Related: A Complete Guide To Blanket Purchase Order

Purchase Order vs. Purchase Requisition

  • Purchase order: a formal commitment to buy from a seller
  • Purchase requisition: an internal document requesting authorization to purchase something

Purchase Order vs. Invoice

  • Purchase order: a buyer’s commitment to purchase
  • Invoice: a seller’s request for payment

What Is The Format Of A Standard PO?

While the exact format may vary depending on the organization, a standard PO often follows a similar structure:

  • Header: includes PO number, date, vendor and buyer information
  • Body: details the items being purchased, quantity, price, and other relevant specifics
  • Footer: specifies delivery terms, payment terms, and any additional information

The Bottomline

One thing you should know by now is that time is company money.

But time is also energy, productivity, and efficiency. All these elements are vital for the steady growth of your company. For you to be able to concentrate all your resources on your core capabilities, it’s time to cut your labor investment in the purchase order process.

Yet, one thing purchase order automation can do for you is to help you save time.

However, one must choose the best purchase order software for that to happen, to serve as a valuable tool for your business.

You need a large portfolio of features to help you automate even the smallest manual activities. The future is digital, so it’s time to minimize and digitize your efforts.

And this is where our job begins. ProcureDesk is a purchasing and invoicing solution with QuickBooks, Xero, and other reporting tools. With all these features provided, we aim to help you keep costs under budget control, cut down on invoice processing time, and eliminate data entry in your accounting system.

We are here to guide you in your e-procurement journey.

So, are you ready to take the next step towards procurement automation?

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.