If done right, purchase order automation can help reduce the time spent on issuing and matching purchase orders.

Yet, many companies struggle with automation because they either pick up the wrong tool or process or can’t have their employees adopt the new process.

That leads to failed implementation, mistakes during manual purchases, and bad outcomes for the champion rooted in purchase order automation.

This article will cover the top three mistakes companies make and how to avoid them to make your purchasing process more efficient.

Let’s get started.

What Is Purchase Order Automation?

Purchase order automation involves implementing technology to streamline the entire purchase order process, from the initial step of an employee making a purchase request to completing the payment to the vendor.

By automating this process, companies can significantly reduce human error, save time, and create a more transparent and accountable system. This is particularly relevant for CFOs, controllers, and accounting managers responsible for maintaining a smooth and efficient financial operation.

It provides complete transparency into the purchasing process and saves time by eliminating manual processes and spreadsheets for creating and tracking purchase orders.

 

3 Mistakes With Purchase Order Automation

Now, let’s talk about the common mistakes with purchase order automation that can potentially help your company with an effortless purchase.

Mistake 1: Automating An Inefficient Process

Often, companies rush to implement automation solutions without evaluating the efficiency of the existing purchase order processing.

The result is a faster way to do the wrong things.

An automated system will only magnify the flaws in an already inefficient process, leading to larger-scale errors and complications. This mistake is common because companies may equate automation with immediate efficiency, not realizing that the underlying process must be optimized first. A common problem is a misaligned or overly complicated purchase order approval process.

Mistake 2: Choosing The Wrong System

Choosing the right software or system is one of the most critical decisions in automating your purchase order process.

You might be thinking – they all look the same, so what difference does it make on which one I pick? You won’t buy any car because they all do the same thing, so why do this with purchase order software?

Companies sometimes select a system that doesn’t align with their specific needs, scale, or workflow. Whether it’s an issue of overcomplicated features, lack of scalability, or a wrong matching process with existing technology, the wrong system can be more of a hindrance than a help.

Companies often fall into this trap due to inadequate research or succumbing to persuasive sales pitches without thoroughly evaluating the system’s fit for their operations.

Mistake 3: Bad Rollout Strategy

A poor rollout can sabotage the implementation even with an efficient process and the right system.

Common mistakes during rollout include inadequate training, not communicating changes clearly to all stakeholders, and not setting up a feedback loop for continuous improvement.

The rollout phase is often underestimated in complexity and importance, leading companies to falter in this crucial stage.

 

How To Implement Purchase Order Automation?

This section will look at strategies to correct these 3 mistakes and set you up for success in your company’s future purchases:

 

Step1: Review And Create A Purchasing Policy

Before diving into automation, it’s crucial to review your existing purchasing process to identify bottlenecks, inefficiencies, or areas of improvement. To do this effectively:

• Conduct an Audit Trail: Map out your purchasing workflow, including approval hierarchies and payment timelines.
• Identify Weak Spots: Note areas where delays or errors are most common.
• Consult Stakeholders: Bring team members directly involved in the process, like accounting managers and the operations team, to gain insights into practical challenges.
• Draft a Policy: Based on the above steps, create a new, streamlined purchasing policy that addresses the identified inefficiencies. If you need to baseline your policy, follow our purchasing policy template
• Get Approval: Get buy-in from all key stakeholders to ensure a smooth transition to the automated system.

 

Step 2: Document Your Requirements

Choosing the right system starts with understanding exactly what you need. Here’s how to go about it:

• List Core Requirements: List must-have features based on your newly drafted purchasing policy and your company’s specific needs.
• Budget and Scale: Determine your budget and ensure your chosen system can grow with your business.
• Research Options: Look into multiple systems and compare their features, scalability, and costs. If you need help, you can download our purchasing software checklist [Add the link]
• Request Demos: Test the software to ensure it aligns with your documented requirements before deciding. The demo is good; a hands-on trial is better.
• Consult Stakeholders: Once again, involve the people who use the system daily to ensure it meets their needs.

 

How To Avoid Mistake 3: Identify Champions Before Rollout

 

A well-planned rollout strategy can make or break the success of your purchase automation efforts. To ensure a smooth rollout:

• Designate Champions: Identify and train a few team members who understand the new system well and can act as go-to resources during the transition.
• Communicate: Clearly explain the upcoming changes, timelines, and what is expected from each team member.
• Provide Training: Arrange comprehensive training sessions, ensuring everyone can operate the new system effectively.
• Soft Launch: Before a full-scale rollout, test the system with a smaller group to catch any unforeseen issues.
• Feedback Loop: Establish a mechanism for users to report problems or suggest improvements, ensuring continuous process refinement.

 

Types Of Purchase Order Automation Software?

The landscape of procurement automation can be confusing. However, you can simplify your search by looking at three main types of solutions:

 

1. Your Current Accounting System

Many accounting systems have built-in features or add-ons for purchase order management. This option is convenient since it’s integrated with your existing financial data.

Pros:

• No need for separate systems.
• Easier to manage and maintain.
• It may be cost-effective if it is already included in your existing package

Cons:

• Limited functionalities specific to purchase order automation
• It may not offer the level of customization or scalability you need.
• Without appropriate controls, you might not want to open your accounting system to your end users.

 

2. Standalone Purchase Order Systems

These are specialized solutions focused solely on purchase order automation. They can either work independently or require integration with your current accounting system.

Pros:

• Specialized features tailored to purchase order management
• Flexibility in choosing a system that aligns with your specific needs

Cons:

• Requires integration with other systems for an efficient end-to-end process.
• This may involve additional costs for purchase and maintenance.

 

3. Purchasing And AP Automation That Integrates With Your Accounting Software

These are comprehensive solutions that not only handle purchase order automation but also include accounts payable functionalities. They are designed to integrate seamlessly with your existing accounting software.

Pros:

• Unified platform for purchase orders and accounts payable.
• Seamless integration ensures data consistency and streamlined operations.

Cons:

• It can be more expensive than standalone options
• It may include features that you don’t need, adding to the complexity

 

Steps In Purchase Order Automation

Now, look at the key steps in the purchase order automation process and how procurement software helps automate these processes. We will use ProcureDesk as an example, but you can use any system that works for you.

 

Purchase Requisition

Purchase requisitions form the cornerstone of the procurement process. Typically, an employee in a department—let’s say, a project manager—submits a request for goods or services through a digital form. Their supervisor then approves the request, and the purchasing department creates the order.

Common challenges include:

• Employees often have to toggle between various vendor websites, copying data into a spreadsheet before submitting a request—a time-consuming task.
• Approvals often involve back-and-forths with supervisors, making the process cumbersome and slow.

Using ProcureDesk, these challenges can be easily overcome. Employees can log into ProcureDesk and directly click on a vendor’s icon, redirecting them to the vendor’s website where they’re already authenticated.

After making their selections, all it takes is one click to send the data back to ProcureDesk and automatically generate a requisition—no manual data entry is required. Here is how the system automatically populates the purchase order form.

If you want a one-off purchase, you can enter that manually using the purchase order form.

 

 

Budget Checks

Managing budgets is a core concern for finance teams, who often grapple with two key issues:

The absence of a proactive budget check mechanism leaves teams unaware they’ve exceeded budgets until after a purchase is made.

Limited visibility into ongoing spending against the budget, typically reviewed only during quarterly meetings.

Purchase order management software offers a streamlined solution to these problems.

Here’s how it works in a purchase order system:

First, the finance team manually configures budgets within the system or imports them from the existing accounting software. When an employee initiates a purchase request, they’re prompted to select an associated budget. Alternatively, the system can auto-assign a budget based on the chart of accounts.

Let’s explore ProcureDesk’s functionality as an example:

Here is an example of how you can configure the budget in ProcureDesk:

In cases where no budget is available, ProcureDesk offers several control measures that the finance team can configure:

• Block the purchase entirely, showing a warning to the requester that no budget is available.
• Display a warning but permit the purchase if it’s over budget within a defined acceptable range.
• Redirect the request for additional managerial approvals.

With real-time budget visibility, not only can the requester proceed informed, but approvers can also easily verify available budgets when granting approvals.

Here is an example of how the approvers see the budget.

Purchase Approvals

Obtaining managerial approvals can often slow down the procurement process, impacting overall productivity. However, an automated purchase approval mechanism substantially reduces the time spent chasing approvals, enabling quicker execution of purchase requests.

ProcureDesk features a versatile workflow engine that allows for flexible customization. Whether it’s a department head who needs to review all requests related to their department or your CFO who insists on scrutinizing all purchases exceeding a certain amount, you can easily configure these rules in the system.

Here’s how simple it is to establish a workflow in ProcureDesk:

Once the workflow is configured, the system automatically routes each purchase request to the designated approvers. The approvers have multiple options for granting approvals:

• Directly from an email notification, without the need to log into the system. The email contains all the necessary details about the purchase request.
• After logging into the ProcureDesk platform, a unified dashboard displays all pending items requiring approval.
• Or you are using ProcureDesk’s mobile app, designed to facilitate approvals on the go.

PO Dispatch Automation

The manual creation and tracking of purchase orders can be labor-intensive and error-prone, often carried out via spreadsheets. Automating this process saves time and increases efficiency and accuracy when it comes to purchase order creation.

Here’s how ProcureDesk revolutionizes the PO dispatch process:

• Automated Generation: The days of manually crafting each purchase order are behind you. ProcureDesk automatically generates POs, providing both accuracy and a significant time-saving advantage.
• Direct Supplier Communication: Say goodbye to endless email threads. ProcureDesk can automatically send the generated purchase orders directly to suppliers, which can help boost supplier performance. Whether through advanced protocols like cXML or a simple email, the system ensures that your order reaches its destination with minimal effort.
• Centralized Process: Don’t waste time hopping between different vendor platforms to keep track of your orders. ProcureDesk offers a centralized hub, making managing and tracking all your orders in one place easier.

Here is an example of a purchase order that is generated by the system:

Tracking Purchase Orders

Managing purchase orders can be complex, riddled with misplaced orders, communication breakdowns, and unexpected delays.

These challenges can incur considerable time and financial costs for businesses across various sectors.

Here’s how an eProcurement system like ProcureDesk can help streamline this process:

• Supplier Order Acknowledgment: Miscommunication or lack of acknowledgment from suppliers can lead to significant disruptions and financial setbacks. ProcureDesk ensures that suppliers promptly acknowledge your orders, mitigating potential misunderstandings and making the order-to-delivery process more seamless.
• Advanced Shipment Notices (ASN): Unanticipated deliveries can strain your operations and staff. When suppliers provide Advanced Shipment Notices through ProcureDesk, you’re informed about what’s coming and when enabling better preparation and efficient allocation of resources. Here is an example of an Advance ship notice:

• Real-Time Delivery Tracking: No more guessing or constant follow-ups to check on the status of your orders. ProcureDesk provides real-time monitoring from when your order leaves the supplier to when it arrives at your facility. This level of transparency is invaluable for precise planning and operational efficiency.

 

 

Goods Receipt Note

When your order finally arrives, documenting the receipt is often considered a mere formality.

However, overlooking key details can result in discrepancies that may have long-term implications. ProcureDesk simplifies creating receipts and ensures that crucial data is accurately recorded.

Whether it’s capturing lot numbers, expiration dates, or other pertinent details, the system is designed to leave no room for errors or omissions. These features are especially crucial for businesses that must comply with regulatory standards or manage complex inventory management.

But what takes ProcureDesk’s capability a step further is its mobile accessibility. Picture this: you’re away from your desk when a shipment arrives.

With ProcureDesk’s mobile app, you don’t have to wait to get back to your computer to record the receipt. You can easily capture all the necessary information from your mobile device, ensuring the procurement process is smooth even when you’re on the go.

Here is an example of a receipt in ProcureDesk.

 

Integration With The Accounting System

Manually reconciling procurement and accounting data is more than just tedious; it’s a significant source of potential errors and inefficiencies. This manual process is time-consuming and can lead to financial discrepancies that may be difficult to untangle later.

ProcureDesk has been designed to address this gap through seamless integration with various accounting systems. Whether utilizing QuickBooks, Xero, Sage, Netsuite, or Microsoft, ProcureDesk ensures smooth and automatic data synchronization between your procurement and accounting platforms.

This integration eliminates the need for manual data entry, reducing the possibility of human error. The result is a streamlined procurement workflow in which purchase requisitions, approvals, receipts, and the entire purchase process in ProcureDesk are automatically mirrored in your accounting system. This seamless data transfer enables real-time visibility into financial transactions, making it easier for finance teams to track expenditures, manage budgets, and conduct financial audit trails.

The integration doesn’t just make life easier for your accounting team but enables a more cohesive and efficient end-to-end entire process for procurement. Through automatic syncing, ProcureDesk helps ensure that every stakeholder—from procurement professionals to finance teams—has access to the most current and accurate data, facilitating better decision-making across the organization.

 

Benefits Of Purchase Order Automation

Here are the key benefits of implementing a purchase order automation system:

 

Streamlined Approval Workflows And Faster Procurement Cycles

• Time & Cost Savings: Automated purchase order workflows expedite the purchase request process, drastically reducing the time spent awaiting managerial approvals.
• Productivity Boost: Employees are freed from the administrative burden of chasing down approvals for online purchases and other repetitive tasks, allowing them to focus on core job functions.
• Transparent Tracking: The status of each purchase request is easily trackable, enhancing visibility and accountability within the organization.

 

Enhanced Budget Control And Real-Time Financial Visibility

• Proactive Budget Checks: An automated system allows for real-time monitoring and budget analysis before purchasing, preventing overspending and aiding in effective financial planning. Aside from that, it also allows automatic purchase, making it convenient for your team.
• Real-Time Visibility: Financial decision-makers can have real-time monitoring of purchasing data, making it easier to adapt strategies and optimize cash flow.
• Quarterly and Annual Planning: Finance and procurement teams can make more informed decisions during quarterly and annual budget planning sessions with accurate, real-time data. Thus, resulting to improved cost savings.

 

Elimination Of Manual Errors Through Seamless Accounting Integration

• Automated Data Sync: Integration with accounting systems means data is automatically and accurately transferred, eliminating the chance for human error with manual systems.
• Streamlined Auditing: Having a single source of truth for all procurement and financial data simplifies the auditing process, making it more efficient and less prone to discrepancies.
• Unified Platforms: Data cohesion between procurement and accounting platforms ensures all stakeholders have access to the most up-to-date and accurate information, improving overall organizational decision-making

 

The Bottomline

So there you have it. Automating your purchase order processing is more than just a trend; it’s a game-changer for your business.

The benefits are clear. From speeding up approvals, keeping a close eye on your budgets, decreasing the risk of errors, and ensuring your accounting data is spot-on.

But remember, it’s not just about hitting the ‘automate’ button and hoping for the best. You must pick the right system, set it up well, and get everyone on board.

If you do it right, an automation platform like ProcureDesk can simplify the process and other menial tasks, helping you avoid common pitfalls and maximize your investment. So, if you still rely on spreadsheets and email threads to manage your purchases, it’s time to take the leap and automate. Trust us; your future self will thank you.

 

FAQs

How Do You Automate A PO Process?

You automate a PO process by implementing a purchase order automation solution that streamlines purchase requisitions, approvals, dispatch, and tracking while integrating with your accounting system.

Can Purchase Orders Be Automated?

Yes, purchase orders can be fully automated through specialized purchase order management software that handles everything from requisitions to payment.

How Do I Create An Automated Purchase Order?

To create an automated purchase order, use purchase order management software that streamlines the process from requisition to payment. This typically involves setting up purchase order workflows for approvals and system integrations for seamless operations.

What Are Four Types Of Purchase Orders?

The four basic purchase order types:

• Standard Purchase Orders: Used for one-time purchases.
• Blanket Purchase Orders: Used for ongoing purchases over a period.
• Contract Purchase Orders: Linked to a long payment term agreement.
• Recurring Purchase Orders: Used for regular, scheduled purchases.