5 Steps to Purchasing Automation for QuickBooks

ProcureDesk customers who are using QuickBooks for accounting have a common problem before using ProcureDesk- they were all struggling with scaling a manual purchasing process and were looking for ways to make the procurement/purchasing process more efficient.

If you use QuickBooks (Desktop or Online version) and struggling with scaling your current procurement process, then read on.

This blog post is specifically written for finance and purchasing managers.

In our experience, you probably are the person responsible for the purchasing process and charged with finding a better solution.

In this blog post, we will walk you through a step by step process for transitioning a manual, error-prone purchasing process to a fully automated and seamless purchasing process.

We will also provide some practical tips you can implement today to make the process more efficient. The goal here is to set up a purchasing process before you invest in a purchasing automation tool.

What we will not cover is an overview of the ProcureDesk purchasing system. If you need that, feel free to register for a ProcureDesk tool demo.

So a grab a drink of your choice and let’s get started!

3 common triggers for purchasing automation

Yes, procurement automation makes sense on paper but you would be amazed to know that more than 50% of QuickBooks customers still have a manual purchasing process.

By manual, we mean creating purchase orders in SpreadSheets or even Word document.

If you are a very small company (up to 10 people), you probably are not creating a lot of purchase orders anyways and even if you are, the native purchase order functionality in QuickBooks does the job well.

However, when it comes to companies that have 10 + employees, you start seeing the need for a better purchasing process that can sit on top of the QuickBooks system.

The first attempt to come with a better process is always a form!

That could be in a Spreadsheet, paper or any other format. Over time, companies keep on using the same process even though the purchasing need of the organization has changed drastically.

So why it is that so many companies still struggling with a manual process?

If you are one of them, you are probably lacking a trigger to look for automation. A trigger is an event that kicks in this thought… “We will not use manual processes any more!!”

Triggers for purchasing automation

Here are some of the common triggers

1. Growth

In our experience, we have seen companies looking for automation when they are continuously growing the business and the growth is driving an increase in the number of transactions.

For example, a CPG company is seeing an uptick in product demand which is driving up the demand for raw materials. The volume of purchase orders has gone up and the manual process is not scaling up with the volume.

2. Change in the purchasing  process

Sometimes a change in process is driving the need for better automation.

For example, A company realized that they are spending $50,000 in office supplies annually. The purchase is happening from 3 different vendors and the company can save up to 20% by consolidating the vendors down to one.

Easier said than done, so they need a process that will drive the users to the right vendor all the time and ensure that they can save money due to reduced cost.

3. Better Cashflow planning

This is one of the common scenarios we see and the need is very evident with the finance teams.

A typical process for startups and small companies is that they generally don’t issue purchase orders.

Someone would call the vendor and once the product or service is delivered, the invoice is sent by the vendor to the finance team.

The finance team is then left with figuring out who this invoice is for, whose budget this is going to hit and whether this was an approved purchase. Sounds familiar!

There are a couple of issues with this approach

a) The spend has already happened, so whether the spend was authorized or not, you are obligated to pay the vendor.

b) The second issue is with working capital. The finance team can’t accrue the expenses till the invoice shows up.

So if you are looking for predictable cash flow, it is hard to predict that in advance because you don’t know what is being purchased.

So the finance team is looking for a way to get better visibility into spend and preferably before the invoice shows up. That can be easily implemented with the help of a purchase order process.

So how do you go about solving the issues – the obvious answer is to automate the purchasing process.

We don’t disagree with that, you probably need a purchasing system to automate the process but that is not the subject of this post. What we want to cover here is the key set of processes that you should have in place before you start thinking about automation.

Automation is only going to make the current process more efficient, so if you have a bad process in place, automation might make it worse.

5  steps to purchasing automation

Now let’s look at the 5 key steps which transform your procurement process from being unpredictable to a well-oiled machine.

5 steps for purchasing automation in QuickBooks

1. Setup a basic purchasing policy.

The first and foremost step is setting up a purchasing policy. If you don’t have a purchasing policy, we highly recommend first reading “Setting up a purchasing policy for your company”

Here are the key steps you need to take to set up a purchasing policy.

First, analyze your spend data for the last 12 months to understand purchasing patterns. What you buy, what is the typical order/invoice amount.

You most likely won’t have purchase order data, which is fine.

Just export all the Bills from QuickBooks into a spreadsheet and you can do your analysis there.

There are a couple of reasons why this analysis is required

a) You need to understand your key categories of spend so that you can address in that in your purchasing policy. For example, you realize that employees are charging a prime membership fee for Amazon.com when you already have a corporate credit card.

In that case, your policy should clearly define whether you allow that or not.

Let’s say there is another case where you saw a lot of purchases for snacks, bars for the office kitchen. If that is your policy, then that is great. If not, then that should be stopped.

The purpose of the policy is to provide guidelines, and you can only define guidelines when you know what is being purchased by your employees.

b) In case you are using purchase orders, then you should be able to identify what Spend is already going through purchase orders.

For example, If your goal is to increase spend visibility then you need to know what process change needs to be communicated to the employees so that they can create purchase orders instead of just sending invoices for processing.

You might want to think about setting up a No PO, No Pay policy so that you reduce the number of invoices without a purchase order. In our experience, that happens over a period of time.

Setting up a no PO, no Pay policy right upfront may drive a lot of noise in the system. So start with minimal changes and then changes policies over time.

2. Setup a purchase order process.

After you are done setting up the purchasing policy, the next step is to set up a purchase order process.

Most companies already have a purchase order process, so why we mention it here?

It is worth reviewing the current process and to assess what is working and what needs to be changed

Here are a couple of suggestions

a) Review purchase process for key categories

You should review how the purchase order requests are created and submitted by the end-users. Here the focus is not just automation but also what items are being purchased.

Let’s take an example of office supplies.

For office supplies, your employees might be purchasing it from Amazon.com or sites like Staples.com. Let’s pick staples.com for now.

Each employee might have a separate account, they use their own credentials to log in and of course, there is no way for you to easily consolidate all the purchasing data for further analysis.

It is, in fact, a much better experience if you can have a system that integrates with Staples using a punch-out process so each user gets the same experience. Any good purchasing system should have the capability to automate the transmission of the purchase order electronically to the vendors. 

b) How are orders submitted

How you sent purchase orders to vendors easily add up to 15% of the total purchase order cost – which on average is anywhere between $30 to $500 per purchase order.

So an important part of the purchase order process is to understand the areas where this cost can be reduced by automating the transmission of purchase orders to vendors.

3. Setup approval limits

Approval limits are a part of your purchasing policy, but if you don’t have a purchasing policy, chances are you are probably doing one of the following

1. You don’t have any approval process and most of the purchases are directly managed by the employees. The invoice shows up and you send it for internal review before it is paid.

2. The other extreme is that the owner of the company is reviewing every single purchase and that drastically slows down the process.

So what is the right answer for approval limits?

We recommend the following

1. Setup an 80-20 rule. 80% of the transactions should be reviewed by the department manager for which the purchase is made.

2. The number of transactions being approved by senior management should not be more than 20%.

How did you decide the approval limits then?

If possible review your purchase or invoice history to know the average amount for a single purchase. Based on the average amount, you can set up workflows to route requests to the appropriate person.

This is the most common scenario for most of our customers

1. For spend amount <= $5,000 , Immediate manager approval is required.

2. For amount > $5000 and up to $25,000, immediate manager and department’s Director approval is required.

3. Any amount greater than $25,000 should be approved as a Vice president or a senior staff of the management team.

If you realized that most of your purchases are between $5,000 and $10,000, then you can increase the limit for managers to $10,000.

When setting up workflows, there are two main areas to focus on

  • What level of control and accountability you want to give to middle management. I.e managers, senior managers.
  • How efficient you want the process to be. For example, you want more control so the owner of the company is reviewing every purchase. If that is the case, then the senior management is the bottleneck and a purchasing tool is not going to help with the efficiency of the purchasing process.

At the end of the day, you have to find the right balance between efficient process and control.

4. Automate the purchasing process

Once you have the process defined, it is time to automate the process so that the basic purchasing steps can be automated.

Here are things to focus on for purchasing process automation.

Ease of use

Ease of use is a factor of two things

Ease of use = Amount of information captured x ease of navigation and data entry

The amount of information is what the user has to provide to create a request for purchase.

Procurement and finance always want more information captured upfront so that it is easy to report and capture better data upfront.

Users, on the other hand, want to enter the least amount of data.

How do you find the balance?

First of all, if the same information is entered again and again, then set it as default based on user preferences.

Second, if a piece of information can be entered later in the review process, for example, Chart of Accounts, then that step should be entered by finance in the review process.

Any good purchasing system should be able to handle both of these scenarios.

The ease of navigation is how easy it is for users to use the system. That you should be able to judge during the selection of the purchasing system.

Set up Flexible workflows

The approval workflow should be automated so that the user is not left with the burden of trying to identify the right approval levels based on the amount of the purchase.

Now keep in mind, even though the approvals are automated, it still needs to be approved.

So there should be multiple approval mechanisms so that it easy for the users to approve the purchase request.

For example

  • Through a mobile app so that approvals can be done on the go.
  • Other applications like Slack if most of your users are already using such application
  • Through emails so that the users don’t need to login to the system.

 Automated transmission of the purchase order to suppliers

The second thing you should automate is the transmission of the purchase orders to the suppliers.

Once the purchase order is approved, the system should be able to automatically send the order to the vendor without the need for any manual intervention.

If the vendor supports Electronic Data Interchange (EDI), then that is even better because that increases the accuracy of the data.

Catalogs for better user experience

Vendor catalogs play a critical part in improving the purchasing experience for your employees.

So rather than spending time typing in orders, you can quickly select what you are looking to purchase.

The catalogs can be managed by you or you can link to the external vendor catalogs, also called “Punch -outs”

You can read more about setting up catalogs and how to manage the catalogs in the Vendor catalog guide.

5. Implement an Invoice matching process

By implementing a purchase order process, you get visibility into your purchasing spend.

It also helps with better cashflow planning because all purchases are in the system and in advance of the payment.

But what happens when the invoice shows up?

Finance/ Accounts Payable team is still left with figuring out whether they should the invoice or not.

If you don’t have an automated match process, you are probably doing this manually and chasing people over emails.

There is a better way!

Once you setup the system for purchase orders, select a system through which the suppliers can send the invoices to you. Ideally, this should be one system, so that you don’t have to keep on exchanging data between multiple systems.

Two important factors to consider

1. Your suppliers should always quote the purchase order for which they are submitting the invoice. This is required for your matching process, whether that process is manual or fully automated.

2. Your suppliers should be able to submit invoices in different formats based on the level of their automation. For example

– Via good old email.

– Through an online portal, where they can enter the data and upload the invoice.

– Through Electronic Data Interchange (EDI) or cXML standard.

– Through mail, though it is not preferred because you then need to scan the invoice and manually key that in.

Once you have the invoice in the system, set up the matching process so that the invoice data can be matched against other documents.

For example, you can match the Purchase order and Invoice (also called 2-way match) or you can match the Purchase order, Invoice, and Receipt (also called 3-way match).

The matching process should match the following across documents

  1. Total quantity (Ordered -> Received -> Invoiced)
  2. Unit price
  3. Total amount

Any good purchase to pay system can easily automate the matching process.

Setup integration with QuickBooks Online

The last step is integration with QuickBook’s system so that the invoices are now available for payment.

With the help of integration, you can setup a fully automated purchasing process on top of QuickBooks online and without investing any additional amount in your current QuickBooks Investment.

Here are few things to consider from an Integration perspective

1. First, decide what documents you are going to send to QuickBooks and when.

2. If you are not maintaining any Inventory in QuickBooks, then our recommendation is to just send the final invoice/ Bill for payment. In our experience, have a purchase order doesn’t add a lot of value for our QuickBooks customers.

3. If you need to maintain inventory, then, by all means, send the purchase order.

4. You should decide what master data needs to be sync between your purchasing system and QuickBooks. For example, Supplier master, Customer master, etc.

Once you have decided on the type of transactions, the next step is to decide the frequency.

For QuickBooks online customers, we recommend this to be real-time integration. For QuickBooks Enterprise customers, the frequency could be every 30 minutes.


QuickBooks is a great product for managing books, but it is difficult to scale it for creating purchase orders and invoices unless one person is entering all the data in the system or everyone in the company has access to the system.

Both of these options are not viable. 

By implementing a purchasing system, companies can implement a robust purchasing process and the purchasing system takes care of integrating the Purchase orders and Invoices with the QuickBooks system. 

You get an efficient process and efficiency gains without the need to replace your QuickBooks system with an expensive ERP system.

The steps we mentioned above would help you improve the existing purchasing process, even if you don’t automate the purchasing process. 

So get started today!


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