Bonus Material: Purchase Order Tracker Template
Struggling with purchasing order tracking?
Growing companies that don’t have a purchase order system often struggle with keeping up with the volume of purchase orders.
Using this strategy, you can reduce the chaos in tracking the purchase orders. You can go from not knowing where the orders are to exactly able to track all the orders.
With this strategy, you can reduce purchase order delays and ensure transparency across the purchase order lifecycle.
Here are some of the results our customers have achieved using this strategy:
In this article, we are going to cover 3 ways you can track your purchase orders. We will talk about somewhat free options and a better way to use a purchase order software.
Nothing is really free, even though Spreadsheets might be free but there is a cost of employees’ time to track the purchase order in Spreadsheets.
Use this template to start tracking purchase orders and if you are just getting started, this template is all you need to get your purchasing under control.
Before we get started, let cover some basic questions
Purchase order tracking means the activity of tracking the lifecycle of a purchase order.
A typical purchase order follows a typical lifecycle
This is the first step of the purchase order lifecycle. After the request for purchase is approved, a purchase order(PO) number is generated and the purchase order is sent to the vendor.
You might be creating the purchase order in spreadsheets, or using an electronic purchase order system, or using purchase order templates in Word. The typical information on the purchase order includes terms like payment terms, purchase items, and timeframe in which you need the delivery of the product.
After you issue the purchase order to the vendor, the acknowledgment step allows the vendor to confirm if they can meet the purchase order requirements.
For example, The product you have ordered might be discontinued or back-ordered. By acknowledging the order, the vendor is communicating whether they can deliver the product and when. The communication is sent to the individual stakeholders or supplier managers.
When the vendor ships the product, the status of a purchase order changes to delivered.
Buyers generally create a Goods Receipt Note (GRN) to record the delivery of the product and capture other details like serial numbers etc. The buyer often needs reminders for creating receipts.
A closed status means that no more activity can happen for this purchase order. For example, an order is delivered in full and no more activity can happen.
There are two variations of the closed status
The short answer is that you should always use a purchase order tracking process.
However, when you have a large volume of purchase orders, the purchase order tracking process is more relevant.
Here is a quick checklist on when purchase order tracking makes sense:
For example: If you only issue 3 purchase orders a month, there is not much to track!
However, if you are issuing 100 purchase orders a month, you definitely need a process to tracking the purchase orders.
The second aspect is the complexity and vendor count,
If the 100 purchase orders are only issued to 2 vendors, it might be easier to just call the vendor and figure out the status.
So in a nutshell, if you have a large purchase order volume that is spread across multiple suppliers, a purchase order tracking process is an absolute must.
The short answer is Yes, it is always recommended to have an approval workflow for purchase orders.
We call this compliance triangle:
During the purchase order lifecycle, the information regarding the purchase orders changes often.
Here are a couple of examples of why you might need to change the purchase order.
Here is why you might need an approval workflow for purchase order changes.
You want to know why something changed and when it was changed.
For example, an employee placed an order for a widget that cost $1,000. The original order was for 100 widgets but now they need to change it to 150 to accommodate for increased demand.
That is an increase of $50,000 in additional spend as compared to $100,000 that was originally authorized for the purchase.
Depending upon the size of the company, this could have a significant impact on the company’s budgets and should be authorized at the right level of the management.
Continuing with the above example, if you don’t have a purchase order approval for changes, any employee can change the purchase order and palace orders for items that were not authorized for purchase.
By having an approval process for changes, you can ensure that you have the control mechanism to prevent procurement fraud.
Another benefit of a purchase order approval process is that you can easily control rogue Spend. Rogue spending is when employees purchase products but vendors other than what is chosen by your purchasing department.
If the product specification changes as a result of the change order, then having an approval workflow affords you the opportunity to review the impact of specifications.
For example, you purchase a widget from a vendor but for some reason, the widget is back-ordered.
The vendor offers a replacement part but unless that is approved through a New Product Introduction process, you don’t know if it meets your requirements or not.
There are multiple ways you can implement a purchase order tracking system. We cover three options here:
Spreadsheets, an online purchasing system, or your accounting systems like QuickBooks.
These options vary from free to paid.
In each option, we would cover the details on when to use this option and where it doesn’t make sense to use that option.
Let’s get into details.
The first option is of course a Spreadsheet. There is nothing that can’t be solved using a Spreadsheet!
Go ahead and download the template here:
And get started with tracking purchase orders.
Purchase order tracking is useful for companies with the following purchasing attributes
Create a simple spreadsheet or a Google doc that your team can easily maintain.
All you need is some basic information like the order number, date, supplier name, order status, etc.
To get started, download our free purchase order tracker template and modify it to add any additional columns you need to track purchase order data.
The second option is to use an electronic purchase order tracking system. Instead of using a manual process to create and track purchase orders, you can use an electronic purchase order system. There are additional benefits with using a purchasing system, i.e. better process and purchasing compliance.
You should think about implementing a purchasing system for order tracking if your purchasing process looks like the following
Higher purchase order volume:
If you are creating more than 10 purchase orders a month, chances are that a manual spreadsheet process is not going to work for you.
With a large purchase volume, it is difficult to keep up with entering and maintaining the purchase order tracking data in spreadsheets.
In the case of multiple locations, chances are that multiple people are maintaining their individual tracker or multiple employees are maintaining the same purchase order tracker.
There are also chances of data missing in case someone forgets to update the spreadsheet with a new order they have created.
Multiple changes to purchase order:
The more frequent changes you have to the purchase orders, the more updates you need to the spreadsheets.
The most important thing to know is what changed and who changed it. The more the changes, the more laborious it is to update the spreadsheets with order tracking information.
A large spread of vendor and items:
If you have a large spread of vendors and items, that means more orders and different purchase order methods across the board.
For example, some vendors might expect the orders to be placed on the website or some might expect the orders to be placed over the phone.
With the different order methods, there is an increased chance of errors in updating the spreadsheet.
There is multiple purchase order tracking software available in the market.
The key is to find a solution that works best for your requirements.
Here is a set of key features you would need for purchase order tracking software
If you would like to see how ProcureDesk can help you with purchase order tracking, feel free to schedule a demo with one of our purchasing experts.
Here is an example of how you can track orders in ProcureDesk:
The third option for tracking purchase orders is to use your existing Accounting package.
We are using QuickBooks Online here but you could replace this with Sage, Xero, NetSuite, or any other system that has a purchase order functionality.
Using your accounting system as a purchase order tracking system is feasible. However, there are certain limitations.
It is best suited for companies with:
Low purchase volume:
If you are creating 10-20 purchase orders in a month, then this strategy could work for you. The volume is low enough that the purchase orders can be directly
Predictable life cycle and simple inventory management:
If the purchase order lifecycle is predictable, then that means fewer changes to the purchase order process.
The lower the number of changes, the less you have to change the purchase order in QuickBooks.
Limited products or service purchase:
If you have a limited set of items you purchase, it is very easy to set those items up in QuickBooks as item master.
That gives you the ability to create the purchase order faster by picking up the items from the item master instead of entering the line description manually.
This speeds up the process as well as reduces errors while creating purchase orders.
A single person in the procurement team creating purchase orders:
If you don’t have multiple locations or multiple people entering purchase orders, then this strategy could work for you.
The problem with multiple locations or multiple people entering purchase orders in QuickBooks is that now you have to open access to multiple people.
That is not a good strategy because QuickBooks doesn’t have a way to restrict access only to the purchase order functionality. No Controller is willing to take the risk of opening Books to multiple people in the company.
Here is how to set up a purchase order tracking system in QuickBooks.
Decide which option is best for you and get going.
Here is how to decide what option is best for you.
If you decide to go the SpreadSheet route, here is the template for you.
If you are interested in seeing how ProcureDesk can help you with automating your purchase order tracking, use the button below to schedule a 30-minute demo with our team.