by martieLast Updated : Nov-02-2023
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.
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.
Now, let’s talk about the common mistakes with purchase order automation that can potentially help your company with an effortless purchase.
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.
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.
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.
This section will look at strategies to correct these 3 mistakes and set you up for success in your company’s future purchases:
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:
Choosing the right system starts with understanding exactly what you need. Here’s how to go about it:
A well-planned rollout strategy can make or break the success of your purchase automation efforts. To ensure a smooth rollout:
The landscape of procurement automation can be confusing. However, you can simplify your search by looking at three main types of solutions:
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.
These are specialized solutions focused solely on purchase order automation. They can either work independently or require integration with your current accounting system.
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.
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 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:
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.
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:
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.
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:
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:
Here is an example of a purchase order that is generated by the system:
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:
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.
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.
Here are the key benefits of implementing a purchase order automation system:
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.
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.
Yes, purchase orders can be fully automated through specialized purchase order management software that handles everything from requisitions to payment.
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.
The four basic purchase order types:
What you should do now
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