Most importantly, purchase orders serve as written agreements that include details about goods, quantities, prices, and delivery dates.

No matter what goods or services you purchase, you need a way to track those orders.

A paper-based purchase order process can work. But as your company grows, managing all the paperwork becomes a hassle and can slow down procurement.

So how can you create a more efficient purchase order process?

Using a purchase order (PO) system can help.

If you’re still managing purchase orders manually and are looking for a way to streamline this process, then keep reading.

In this article, we’ll walk you through what a PO system is, why your business needs one, and how you can set one up using frevvo’s purchase order workflow software. 

Modern low-code platforms are so easy to use that you don’t need an army of expensive developers or a large I.T. budget. The interface is fully visual, so if you know how to use Excel then you can create your own automated workflows.

Click the links below to jump to the section you want to learn more about:

• What Is a Purchase Order System?
• Benefits of an Automated PO System
• How to Set Up an Automated PO System in 5 steps

What Is a Purchase Order System?

A purchase order system is software that helps you create, manage, and track purchase orders that you send to your vendors. It allows you to scale and automate the entire procurement process.

Purchase orders are part of the procurement process. The workflow varies for every company depending on their requirements, but it generally follows the same steps. 

Here’s an example of a purchase order workflow:

The PO process starts with an employee creating a PO and ends when your company pays the invoice and enters the transaction in your records.

Many companies in the early stages may forego purchase orders and enter into informal agreements with their suppliers. Informal processes are convenient, but what if there’s a dispute about payment or delivery terms?

Things can get complicated without proper documentation.

Having a formalized PO system enables you to create purchase orders, manage vendor information, and approve invoices from one place.

Purchase orders are legally binding once signed and accepted, so they provide legal protection. If there’s a dispute from either side, you’ll have a record of the agreed-upon terms in your PO system.

A paper-based purchase order system is better than no system at all. But relying on a manual process is costly and inefficient. It’s also prone to errors — an employee may duplicate an existing PO, enter in the wrong data, or forget to route a document.

Let’s take a look at how an automated PO system can address these challenges and improve purchase order management and how even a small business with limited I.T. resources can implement one.

Benefits of an Automated PO System

Managing purchase orders manually just isn’t practical in the long run, especially as you start to process more purchase orders and work with more vendors.

You’ll save yourself (and your employees) a lot of time and effort when you use purchase order workflow software like frevvo to automate the process.

Here’s how an automated purchasing system can streamline the procurement process.

Increases Productivity

Each minute an employee spends manually preparing a purchase order is time they could spend on more productive tasks like negotiating better contracts or, better yet, improving the customer experience.

The increased risk of entering data incorrectly or making a calculation error also means spending even more time to correct those mistakes.

An automated PO system can help you streamline the entire purchasing process. Employees won’t have to waste their time filling out the same forms or chasing signatures for approvals.

Lowers Processing Costs

Manually processing purchase orders means longer cycle times — the time it takes to create and deliver a PO to a vendor or supplier.

Companies with an automated PO system have an average cycle time of 24 hours, while those that rely on manual methods take 35 hours.

Higher cycle times mean higher processing costs.

Using a PO system to reduce cycle times can help you lower processing costs. Ways to do so include reducing manual data entry and automatically routing POs to vendors.

Improves Cash Flow Management 

A healthy cash flow puts your company in a better position to meet your financial obligations and sustain operations. However, 44% of small business owners who had cash flow issues said the problems came as a surprise.

A PO system gives you full visibility into upcoming financial commitments. Accounting teams can analyze previous orders and anticipate future spending. They can also plan accordingly to ensure there are sufficient funds to cover incoming invoices.

When you know how much money is available, you can plan your budget more effectively and avoid cash flow surprises without having to go through a trail of paper forms.

Helps Reduce Errors and Prevent Fraud

Manual processes are more prone to errors. Instances of overpayments, inaccurate deliveries, and even fraud are likely to occur when purchasing controls are lax. 

Using frevvo’s purchasing software can help you implement strict internal controls and enforce adherence to internal policies to reduce errors.

Examples include setting controls on who can start a workflow and requiring signatures. You can even create a rule that routes POs above a certain value to a senior executive for additional review.

If an error does occur, a PO system creates an audit trail that shows what actions were taken, who performed them, and when. With these insights, you can take steps to create a process improvement plan and eliminate inefficiencies.

Improves Vendor Relationships

Companies that handle invoices manually take 45 days to process invoices, while those that use automated approval workflows take just five days on average.

A PO system doesn’t stop at creating and approving purchase orders. You can also integrate it with your accounting software and set it up to pay invoices in a timely manner.

By streamlining the invoice approval process, you can improve relationships with your vendors and even take advantage of early payment discounts.

Some vendors offer 2/10 net 30 payment terms. If you pay an invoice in full within 30 days, you can get a 2% discount on the net amount, which can translate to huge savings in the long run.

Now let’s look at how you can set up an automated PO system.

How to Set Up an Automated PO System in 5 Steps

Even if you’re a small business with a limited budget and I.T. resources, you can still set up a fully automated PO system and streamline the procurement process.

With frevvo’s purchase order workflow software, you get the benefits of an enterprise-grade system with audit trails, hardened security, built-in ADA and WCAG compliance, and more. 

The best part? There’s no need to code or spend significant resources.

Follow these steps to get started.

1. Start With a Pre-Built Template or Use the Workflow Wizard

As your company starts processing more purchase orders, you simply can’t afford to lose months of development time to create a custom solution.

frevvo’s purchasing software lets you set up an automated PO system in a matter of days or even hours. Get started by selecting a pre-built template — each comes with an automated workflow and form that you can use right away.

Here’s an example of a purchase order workflow that you can install:

The workflow starts when an employee creates a purchase order. Then it routes to a manager for review and then routes to the finance department for final approval before it gets sent to a supplier. You can start with this template and add or modify individual steps.

Want to create your own fully customized PO workflow?

Use the Workflow Wizard to build a custom workflow from scratch. Add and configure as many steps as you need to create a workflow that fits your purchasing process.

The purchasing process can vary from one organization to another. Ensure that you understand what each step involves, including who is responsible for them when creating an approval workflow.

Use this opportunity to perform a business process analysis and identify any redundancies or inefficiencies in your PO process.

Give each step a meaningful name and describe who works on it, and frevvo will automatically generate a workflow that contains routing and a basic form.

2. Customize Your PO Forms and Add Business Logic

The next step to setting up an automated PO system is to create an electronic purchase order form. 

Purchase orders typically include the following:

• Contact information
• PO number
• Date
• Item descriptions 
• Quantity and prices
• Payment information
• Expected delivery

These items can vary depending on your company’s procurement requirements. But it’s a good idea to create a standardized PO form for consistency.

Here’s an example of a purchase order form that comes with the pre-built template:

With the visual drag-and-drop builder, you can add text fields, dropdown lists, checkboxes, and more to customize your form to fit your business requirements.

That’s not all.

Forms are more powerful when you add dynamic behavior to them. For example, fixing simple errors or sending forms back because of missing information creates unnecessary delays.

frevvo’s purchase order system comes with a visual rule builder that lets you add business rules to your forms — no coding required.

Here are some things you can do with business rules:

• Pre-populate fields based on the logged-in user
• Calculate totals and subtotals automatically
• Specify custom formats for fields
• Make fields (like signatures) required
• Show or hide form controls like text areas

Here’s an example of how you can use the rule builder to add business logic:

With the workflow builder, you can add or modify steps, customize notifications and other messages, and also add conditional routing to your PO process. For example, you can create a rule that routes POs above $10,000 or more to a senior executive for additional review.

Here’s an example of how that looks:

Other ways you can apply business rules to your workflow include routing a PO to the right manager and restricting vendors based on which department is submitting it.

3. Integrate the PO System With Your Systems

Employees waste time when they have to look up vendor information or perform calculations.

With frevvo’s PO system, you can connect your forms to internal business systems and automatically populate fields based on a selection. For example, if you have customer data in a SQL database, you can create a form that performs a lookup to dynamically populate that information into the proper fields without the user having to type in anything.

Here’s an example of how that looks:

You can connect your forms to other data sources like your inventory or accounting system,  Google Sheets and SharePoint. This will help reduce the time spent on manual data entry and keep your systems up-to-date. 

4. Test and Deploy Your Workflows

By now, you should have a purchase order form and an automated workflow. But don’t assume that everything will work perfectly.

Test your new workflow to ensure it works as intended. Get feedback from your team or those in the purchasing department.

If you’re setting up a PO system for the first time, there may be hiccups along the way. It’s best to fix any issues before you deploy it across the organization.

It’s not always easy for employees to adapt to new changes in the workplace. Provide the training that your team needs to help them use the new system and make the transition as smooth as possible.

5. Analyze and Optimize Your PO System

Even after you’ve implemented a PO system, your job isn’t done yet, as you should continuously look for ways to improve it. Even a small change can make your workflows more efficient.

With frevvo’s new analytics dashboards, you can track key performance indicators (KPIs) like cycle times and get a full processing time breakdown by approvers.

These metrics can help you measure the performance of your PO system and even identify bottlenecks that are slowing it down. As you make any changes to your workflows, make sure to communicate them to your team and update your training materials.

Create an Automated PO System Today

Whether you’re an early startup or an established company, setting up an automated PO system to manage the procurement process is a must. It’ll help you speed up processing times, simplify record-keeping, and minimize errors.

frevvo’s purchase order workflow software features a fully visual interface, so there’s no need to code or wait for months of development time to introduce automation to your organization. 

Plus, you won’t have to spend significant resources to reap the benefits of an enterprise-grade system that might ordinarily be out of reach.
Get started with a free 30-day trial today to try frevvo’s purchase order software, or contact us to speak with a business process expert.

The post How to Set Up a PO System (Even on a Limited Budget) appeared first on frevvo Blog.

But this bureaucratic pain is no longer necessary thanks to the advent of purchase order automation software.

Click the links below if you want to jump ahead:

• A Look Into the Purchase Order Process
• What is a Purchase Order Form?
• Pitfalls of a Manual Purchase Order Process
• 9 Key Benefits of Digital Purchase Order Forms
• A Step-by-Step Guide to Digital Purchase Order Software
• Try frevvo Free to Automate Your POs

A Look Into the Purchase Order Process

The purchase order process is the entire journey of a purchase order. It’s part of every organization’s overall procurement process. It starts with purchase order creation, its approval, dispatch, delivery, invoicing, closure, budget checks, contract management, quality checks, and anything else that is required for an order to be fulfilled.

For this process to be clear for all parties involved — the sales rep, managers, and buyers — establishing a proper flow is key.

Here is what one possible purchase order process flow could look like (yours will vary depending on your business requirements):

In this example, the process conditionally requires the approval of a VP if the amount exceeds a certain threshold.

What Are Purchase Order Processes Used For?

The main goal of a purchase order process is to manage orders and expectations surrounding this order. When a clear structure is established, all parties involved understand what will happen at what step of the flow.

This helps to clear up misunderstandings and errors in communication.

However, their use goes way beyond fixing communication. A process following purchase order management best practices also helps you track your paperwork, which will, in turn, make it easier to keep your budget in check.

For instance, imagine how your AP department would react if they received an invoice for several hundred thousand dollars due within 30 days. Without a properly organized purchase order process, the AP department won’t always be warned – this makes it needlessly difficult for them to do their job.

Having a proper paper trail is also vital when you’re audited. Your purchase order process can provide evidence of a transaction in the case of a financial audit, thus protecting you when it comes to the legal aspect of your finances. If you don’t have a proper process and tend to usually note down orders on a piece of paper, this isn’t proof enough for auditors.

What is a Purchase Order Form?

Every PO process starts with a purchase request form that’s filled in with information about the PO and is then routed around according to business requirements.

The purchase order form becomes a legally binding document once it is accepted and signed by the vendor. This document outlines everything the customer and the vendor need to know about an order.

Purchase order forms are the single point of reference in the case of a dispute or an issue in clarity. In 2014, a federal court ruled that purchase orders are an enforceable contract between two parties in the case of MidAtlantic International Inc. vs. AGC Flat Glass North America Inc. If your process requires the supplier to accept the PO, it serves as a legally binding document and can be used to address any discrepancies.

What Should a Purchase Order Include?

Your purchase order must contain everything necessary to clarify the purchasing process. This includes the items in the order, price, delivery expectations, payment terms, and so on.

A typical purchase order form might look like this:

Types of Purchase Order Forms

• Standard: This is your typical PO that’s used to make one-off orders for products or services. They’re usually made when a specific need arises within your company.
• Planned: For planned POs, everything is specified except for the delivery date. This type of PO is usually made when you can anticipate a particular need. For businesses that need to upkeep office supplies, for instance, this is a great way to make an agreement with a supplier for future deliveries.
• Blanket: Similar to planned POs, blanket POs don’t have a specific date OR amount of the product or service. This is used to agree on terms and conditions as well as budgeting limits, but the specifics are figured out only later. Blanket POs are useful to guarantee better pricing from a supplier, since you’re establishing a need over a long period of time.
• Contract: Contract POs are the loosest type – they act as a formal agreement between the supplier and the client, but don’t establish specifics for products or services. These are used to establish legally binding terms and conditions to create a future flow when a client knows they want to work with a certain supplier.

Try now: Check out these free purchase order form and process templates.

Pitfalls of a Manual Purchase Order Process

Using a manual approach, e.g. emailing an Excel spreadsheet around or even a paper form to process your purchase orders, leads to several challenges down the road.

Lack of Visibility

Without an automated PO system, it’s difficult for all parties involved in a purchase to get visibility to all necessary documentation at once. You also can’t tell where you are in your process unless someone happens to tell you.

Lots of Paperwork Generated

Running a business already involves too much paperwork. While some of it is unavoidable, you should aim to reduce paper where possible. A manual purchase order process just adds to the pile of paperwork and makes it increasingly difficult to stay organized.

Dependent on Human Intervention

For the process to move along, only humans can act – this requires the employee making the initial PO to send an email or walk up to their manager for a signature, then remember to follow-up with the vendor. So many details can go wrong – for instance, if the manager is traveling or the email is sent to the wrong person, the process is unnecessarily delayed.

Process Bottlenecks

The smallest details can cause a bottleneck when you’re using a manual PO process. What if you run out of printed PO forms? What if your manager misplaces the form they were supposed to sign?

This may sound kind of ridiculous, but these things do happen and waste valuable time!

Compliance Issues

You need to comply with business or regulatory requirements, but manual processing makes this difficult. You can’t track the exact process for every order, so how do you know if the process is being followed to the letter every time?

Prone to Errors and Inaccuracies

Human error is unavoidable. This isn’t because people are unreliable – it’s just a part of human nature.

Even the best employee can have an off day and make a mistake. When this happens, you shouldn’t default to blaming your employees – instead, take a good look at your process. Errors are bound to happen over time.

9 Key Benefits of Digital Purchase Order Forms

Now that you understand all the challenges of a manual purchase order process, let’s see how an electronic purchase order system helps overcome them.

Purchase order automation is the process of using electronic purchase requisition and purchase order forms and routing to streamline the entire process. Instead of relying on human-driven manual steps, you rely on a solid purchasing system that automates every step.

In short, digital purchase order forms help you solve all of the pitfalls you’ll encounter in a manual process.

Here are nine of the best reasons for companies to opt for digital purchase order workflows.

1. Fewer Errors

Manually creating purchase orders can lead to errors for several reasons. Handwriting may be illegible and misinterpreted or fields may accidentally be left blank. Mistakes could result in an unnecessary back and forth that wastes both parties’ time. Digital purchase orders remove the chance of illegible text or missing information.

2. Save Time and Money

An electronic purchase order form allows all of your vendors and their information to be stored in one place. Nobody needs to waste time searching for form information. Nothing needs to be mailed or faxed. Orders can be sent instantly and a record is automatically saved. 

Since the automated procedure saves time, it allows your staff to focus on other essential tasks. Less wasted time means you save money. A study by APQC found manual purchase orders can cost companies as much as $506.52 per purchase order. Purchasing software can significantly reduce that number.

3. Improve Security

Filing cabinets filled with papers and emails are not a secure place to store confidential information. Automated systems keep your records safe and are only visible to people set up with permissions. Rather than using passwords, you can choose to integrate with your existing authentication and authorization systems.

4. Reduce Waste

Companies create way more paper waste than necessary. When existing paper forms are replaced by digital purchase order forms, you’ll substantially reduce the amount of paper your company uses. Using less paper saves you money, helps the environment, and improves your image as a green company.

5. Save Space

Say goodbye to rows of filing cabinets stuffed with copies of purchase orders. Your digital purchase order information is safe in the software’s electronic repository. You can also choose to save it to an external database, store it on a SharePoint site, save on Google Drive, or elsewhere. With multiple electronic backups in place, you don’t need your valuable workspace to be jammed with filing cabinets.

6. Unlock Productivity

For most growing companies, time is precious. There are never enough hours in the day to get things done and tasks like manually processing POs isn’t just tedious and time consuming — it’s a significant barrier to growth. Imagine how much more time your team could spend on important tasks like planning and executing rather than rote paperwork, documentation, and manual review.

7. Greater Visibility

An electronic purchase order system makes it easier to see where your money is being spent. You can quickly compare each department’s spending and if a vendor relationship seems profitable. A simple search through documents can show you pending orders, the status of orders, and any payments due.

8. Ensure Compliance

When you begin using your digital purchase order software, you’ll have the ability to set any rules you find necessary. You choose which team members are allowed to request products and who has the authority to approve requests. The software will ensure your rules are followed so you don’t have to worry about it.

9. Less Guesswork

Electronic forms can be as comprehensive as you like. You can limit purchasing to specific dollar thresholds or certain items. If you want, some employees could have higher spending limits than others. Decision making becomes faster when you take out the guesswork and you can avoid any miscommunications resulting in overspending.

A Step-by-Step Guide to Digital Purchase Order Software

With all this in mind, how do you improve efficiency for your purchase order forms? Here is a step-by-step guide for establishing a proper workflow using frevvo’s purchase order workflow software.

When an employee within your organization needs to create a new purchase order, your system should allow them to create this PO online.

The automated PO form should include vital fields that the employee can fill in.  Where possible, fields such as employee name or today’s date should be auto-populated.

Step 1: Use a Wizard to Start Creating Your Digital Purchase Order

Using frevvo, you’ll have the option to customize a fully functional, pre-built template so you can quickly get started. If you prefer, you can start from scratch and, using the workflow wizard, rapidly generate a fully functional digital purchase order including a form, workflow, and pre-built business rules.

Read more: View 10 more examples of business rules here.

Once the wizard has generated the workflow, simply drag and drop in our intuitive designer to create or adjust forms. No coding or design experience is required and you can easily create your exact PO form.

Step 2: Customize the Form

The wizard has generated a basic form that you can use as a starting point. However, you’ll almost certainly need to customize the form using the simple, visual designer to fit your business requirements.

For example, a standard purchase order form typically includes:

• A purchase order number
• Date it was created
• Your company’s contact information
• Vendor contact information
• Item numbers, descriptions, quantities, inventory, etc.
• Price breakdown, including discounts
• Shipping address and expected delivery date

For repeat users, auto-fill can help you save time by finishing details you start to type. It’s vital to have a standardized form with all of the necessary information each party needs to see.

Here’s an example: See that all the necessary fields already exist and several are automatically filled in. When the employee inputs information, validation ensures that all required fields are filled in and the data in each field is valid.

This helps eliminate data input errors and helps the employee create the PO much faster than if they needed to input everything manually.

What About Digital Signatures?

Typically, you won’t have to worry about setting up and configuring signatures. Based on the information you provided in the wizard, the generated form already has digital signatures pre-created and configured in the appropriate sections.

The system also auto-generates business rules so that approval sections are only displayed at the right time.

Step 3: Use frevvo’s Visual Rule Builder to Add Business Logic

POs are easier to use if they perform calculations and pre-fill fields automatically.

Use frevvo’s Visual Rule Builder to add conditions and business logic as needed. It’s easy and 100% visual. If you can use a spreadsheet, you can create business logic:

Step 4: Customize the Workflow

The wizard has already generated a fully functional workflow. There’s no complex coding or setup required

However, you may wish to customize the routing. For example, some POs only need to be approved by company higher-ups if they exceed a certain dollar amount or involve specific products or services. With frevvo’s visual rule builder, simply point and click to define any conditional logic needed in the workflow (e.g., only POs above $10,000 require approval from the VP.)

Step 5: Test the New Digital Purchase Order

As noted earlier, one of the hazards of manual purchase order approval workflow is that forms and records can easily go missing.

With frevvo, once an employee has filled out a digital purchase order and a manager and finance department representative (or anyone else designated in the chain of command) gives their approval, the form is automatically sent to all parties. This helps ensure that companies will have legible, accurate, and securely-stored purchase orders.

Let’s take a closer look at the previous example:

Employee Starts the PO

In this frevvo sample, you can see there is a ‘Send to Manager’ button available to the employee. With one click of that button, the PO is sent to the right person – and that’s all there is to it. The system automatically figures out who the right manager is, and routes to that individual.

Manager Verifies Request

The system automatically notifies the manager once a PO request for approval is pending.

From there, the automated process allows the manager to approve, deny, or send back the form for correction. We all know how busy managers can get so the system includes a mechanism to remind them or even escalate to someone else if the PO is not approved in a timely manner.

This systems also allow digital signatures – this avoids unnecessary printing and scanning of documents. Everything is handled from the same online app.

Everything also works seamlessly on mobile devices; a manager who is traveling can handle the PO from anywhere.

As you can see above, approval takes a single click, just like the original PO creation.

It’s good practice to let the manager make comments – without this functionality, managers may decide to send comments by email, which makes it difficult to track all the information that was exchanged about the PO.

Notify Employee Upon Approval

When all parties have approved the PO, an efficient program automatically notifies the employee who originally created the form.

At the same time, the PO automatically moves to the next step.

Send to Vendor

The vendor receives an approved copy of the digital purchase order with all the needed signatures. From there, the vendor can sign the PO and prepare an invoice. This signature requires no printing since it is electronic. It ensures acceptance by the vendor and creates a legal binding contract.

Notify the Finance Department

Finally, an electronic notification allows the department to prepare for the incoming invoice. It also lets them know of all the terms and conditions involved in the transaction.

Wrapping it Up

Updating from paper to digital purchase order forms allows you to get rid of all the extra steps of the process that are needlessly weighing you down, whether it’s printing, data entry, tracking down lost POs, or sifting through endless email threads.

All of that paperwork can be automated for increased profits, reduced errors, and an overall higher ROI for the entire process.

To get started, try frevvo today and see how easily you can automate your purchase order processing — and hundreds of other operations tasks — with no coding required.

The post Digital Purchase Orders: The Definitive Guide appeared first on frevvo Blog.

More than half of Chief Procurement Officers (CPOs) admit that the underutilization of automation software in procurement processes is a huge problem that needs remedying.

Complex manual workflows are time-consuming and full of errors, slowing down the whole procurement pipeline.

In light of this, 70% of procurement professionals are looking to optimize procurement by switching to digital processes.

By digitizing and automating your procurement processes, you can significantly accelerate procurement, cut out errors, and reduce labor costs.

Read on to discover the easy steps you need to take to automate procurement, along with the top reasons procurement automation software is a must-have.

Want to jump ahead? Click here:

• What is procurement process automation?
• Procurement processes every business should automate
• How to automate your procurement process
• Why should you use procurement automation?

What Is Procurement Process Automation?

Procurement automation is the process of automating manual, repeatable steps and labor-intensive tasks in the procurement process.

By helping procurement workflows to self-execute, procurement automation frees up the procurement team to focus on other critical business activities, while speeding up processing and reducing errors.

There are several stages of the procurement process that can be automated.

For example, procurement software, like frevvo, enables you to create digital forms that auto-populate with correct information pulled from existing databases and cost centers.

Forms will also auto-validate to ensure the data is correct. 

Both of these automations speed up the time it takes to fill out forms and ensure accuracy.

Another way to increase efficiency in your procurement system is to use automatic routing to direct procurement documents to approvers who can sign documents online using e-signatures.

Automatic notifications alert approvers to new documents that need signing, while automatic reminders prevent approvers from forgetting to sign.

With frevvo, you can also integrate your procurement workflow with your record-keeping software so that all records are kept up-to-date automatically. This means no more compliance issues due to outdated or incorrect records. 

In short, automation ensures that the procurement process runs smoothly and isn’t hampered by bottlenecks.

What’s more, procurement automation software allows you to track your spending and make more efficient purchasing decisions, particularly in large organizations with many moving parts.

Automation has so many advantages that it’s no wonder digitization of the procure-to-pay process is increasing.

4 Procurement Processes Every Business Should Automate

1. Purchase Order Processing

Purchase orders are a perfect example of a repeatable process that’s ripe for automation.

• Most organizations perform purchase order approvals with reasonable frequency
• By and large, it’s not a hugely complex workflow
• Automation cuts back on repetitive tasks for multiple stakeholders
• PO processing is easy to automate with purchase order software

2. Purchase Requisitions

A purchase requisition is a common internal workflow that employees use to request approval for a purchase. 

The process frequently requires multiple approval stages, which could be accelerated with automation. 

Automating purchase requisitions has similar benefits to automating purchase orders. It frees up employee time for more important pursuits and ensures that projects aren’t delayed by missing materials.

3. Invoice Approvals

Supplier invoices typically go through an internal approval process before the finance department sends any money to the supplier. 

Invoice approval software can automate the invoice approval process, which saves your procurement team time and makes it easy to approve invoices from anywhere.

4. Record-keeping

It’s important to keep accurate and complete records to stay compliant.

Paper record-keeping processes aren’t just slow — they’re prone to errors and lost paperwork.

With an automated procurement tool, you can integrate your existing systems to automatically update all records for a fully complete, highly-accurate audit trail.

How To Automate Your Procurement Processes

Increase both the efficiency and effectiveness of your procurement processes using intelligent automation technology, like frevvo.

Here’s the process of automating your procurement cycle in six simple steps.

1. Model Your Current Procurement Process

To work out where you can improve efficiency through automation, first you need to map out your current procurement workflow.

60% of business leaders believe that looking into their current procurement processes before investing in transformation would give them the clarity to migrate to digital solutions more successfully. Despite believing this, 82% of them miss this stage completely.

Don’t be tempted to skip this step. It will help you to see where repeatable tasks can be automated to speed up the process.

Try using Business Process Modeling Notation (BPMN) as a way to map out the steps of your workflow as a flowchart.

Remember to map out all steps, including:

• Needs identification
• Purchase requisition
• Supplier research and selection
• Supplier negotiation
• Purchase orders
• Invoicing and payments
• Delivery and auditing
• Record-keeping

2. Audit This Process

Now that you have a map of all the tasks and stakeholders involved in each step of the procurement process, you need to identify points in the workflow that are causing bottlenecks.

Often, bottlenecks appear at points where there’s intense manual labor, such as filling out forms or validating information. 

Automation functionalities, such as auto-population and auto-validation, can cut these stages out and significantly accelerate the workflow while reducing errors.

Look for bottlenecks in the process that slow it down or increase costs, such as:

• Which stages are the longest and slowest? 
• Which are most prone to error? 
• Where are added costs being incurred throughout the process?

Likewise, ask yourself where there are repeatable tasks, such as copious data entry or points when employees have to manually take paperwork to approvers.

Tasks that are repeated the same way each time can generally be automated.

3. Identify Key Areas for Automation

There are two steps to automating these bottlenecks and repeatable tasks. First, you need to digitize these processes. Then you can automate them.

Look at where you can switch from manual to digital processing in your procurement process.

For example, all manual purchase request forms and purchase orders can switch to dynamic digital forms. 

Not only does this enable you to access forms online and keep digital copies, but it also means you can link forms to your existing databases to auto-populate forms and auto-validate data.

When it comes to approvals, digitizing forms and adding e-signature functionalities means that procurement documentation can be approved from anywhere.

You should also switch to digital invoicing and look to move manual record-keeping to digital software.

Now, look at the dynamic parts of the process where one stage of the workflow moves to the next. What can be digitized and automated to speed up the flow?

Staff shouldn’t be sending forms by email, or worse, by hand. With automation software, you can automatically route forms and documentation to the next stage in the process, as well as send them to approvers to sign online.

4. Choose the Right Procurement Automation Software

To automate your procurement processes, you’ll need sophisticated procurement automation software, like frevvo.

When searching for automation software, 40% of organizations agree that training and set-up expenses are the biggest blocks.

Look for technology that’s easy to use, so that your staff requires only minimal training. It should be simple to migrate to and straightforward to integrate with your existing systems. This ensures that you won’t waste time setting it up.

To enable access from anywhere, you’ll want cloud-based, mobile-ready software. This is especially important if you’re working with remote teams. 

Lastly, make sure your automation tool has a wide range of functionalities to enable dynamic digital form creation, complex routing, and online approvals.

To cover all these requirements, Safety Technology Holdings chose frevvo.

With multiple locations worldwide, the software company needed automation software that could be accessed from anywhere.

This was especially important since purchase requisitions had to follow a complex routing structure. They would send forms from employees to managers, and then on to either the VP, CFO, or CEO — all of whom are in different geographical locations.

Thanks to frevvo, Safety Technology Holdings was able to get rid of its mix of InfoPath forms, custom-built applications, and PDF processes that were slow, tedious, error-prone, and wasteful.

Now, the software company enjoys an automated routing system that’s accessible from anywhere, on any device. This means no more chasing paperwork, and approvals happen on time.

5. Build Procurement Automation Workflows

Once you’ve picked your software, you’ll need to build out your procurement workflows. 

Take each individual workflow within the whole purchasing process and build it individually.

Start by building the overall workflow, adding in all the approval steps the process runs through. 

With a comprehensive tool, like frevvo, you’ll be able to add complex conditional routing, based on your approval structure using the simple drag-and-drop workflow builder.

Next, build the digital forms that will need to be filled out and signed throughout the process. Luckily, with frevvo, there are plenty of built-in templates to choose from, so you don’t have to start from scratch.

If you do want to build your own, however, this is super simple thanks to the straightforward drag-and-drop form builder.

After this, move on to add any complex business rules to dynamically modify each form’s behavior.

Finish off by generating PDF forms from the workflow data.

6. Measure and Improve

How will you know if your automated process is faster, less error-ridden, or cheaper? 

Make sure you pinpoint key performance indicators (KPIs) and measure these regularly to monitor the overall performance of your procurement workflows.

Not only will these measurements help you to see how automation improves manual processes, but they will also help you to pinpoint future areas where you can further improve your procurement workflows.

You may notice that some steps are unnecessary. Alternatively, you may decide you need multiple approvers for each step in case one is busy or out of the office. 

Only by consistently measuring your KPIs will you notice where your procurement process is bottlenecking and where you can implement new tweaks to improve efficiency even further.

Why Should You Use Procurement Automation?

Procurement automation doesn’t just speed up the procurement process; it also reduces errors, increases cost savings, and makes it easier to audit your workflows.

Here are the key benefits of procurement automation.

1. Speeds Up the Procurement Process

Manual procurement processing is slow, due to hefty data entry requirements and delays in approvals.

42% of business leaders agree that automation can accelerate workflows by speeding up the time it takes to complete repetitive tasks.

Specifically, procurement automation can speed up the process by auto-populating and auto-validating forms to cut back on data entry. 

You can also automatically route forms, so staff no longer have to submit documents manually. Automatic notifications and reminders prevent delays in the approval process.

Just look at how Pivotal accelerated its procurement.

By implementing frevvo’s automation software, the technology company switched from manual purchase cards and purchase order workflows to automated processes.

Now, thanks to integration with Google Sheets, data is pulled from Pivotal’s cost centers and automatically routed to the correct approver.

2. Cuts Back on Costs

When your procurement processes are heavy with manual data entry, you end up paying for a lot of labor hours. This is especially true if staff have to spend extra time remedying errors or physically chasing approvals.

31% of business leaders agree that automating workflows reduces labor costs.

In fact, cost-effectiveness is the number one benefit of digital procurement processes.

3. Reduces Clerical Errors

Manual processing is error-prone, meaning staff often have to spend extra time to remedy errors and redo lost paperwork. This leads to added labor costs.

Half of all business leaders and employees agree that you can reduce manual errors with automation software. 

By switching to frevvo, ONEIL significantly reduced procurement errors.

The company had previously been using InfoPath for purchase requisitions, but the process was peppered with unexplained errors.

Now, thanks to frevvo’s dynamic digital forms, purchase request forms auto-populate and auto-validate, cutting out errors and saving time on data entry.

4. Helps to Mitigate Procurement Risks

There are many procurement risks to consider: late or missing paperwork, late delivery of goods, incorrect products, non-compliance, and so on.

By automating the procurement workflow, you can ensure that you have a full, correct audit trail that tracks all actions along the pipeline.

This helps to mitigate risks and improve accountability, which is why 72% of business decision-makers agree that digital processing increases business resilience.

Get Started Today

Procurement automation saves time and money, while cutting back on costs, improving record-keeping, and streamlining supplier relationships.

By switching to procurement automation software, you can modernize your procurement workflows, so your procurement team has more time to focus on more important areas — no more chasing approvals.

Automating your procurement processes is easy with frevvo. Sign up for a free 30-day trial, install a template, and get your first process in place in under an hour.

The post Your Ultimate How-To Guide to Procurement Automation appeared first on frevvo Blog.

What’s the Difference Between a Purchase Requisition and a Purchase Order?

A purchase requisition is an internal document that focuses on ensuring that employees consistently follow internal business norms when making a purchase. It ensures that the necessary checks, reviews and approvals are in place before placing an order.

A purchase order is a legal contract between vendor and buyer. It’s the actual document that the business sends to the vendor to place an order and will generally outline terms & conditions, legal obligations and protections for both sides.

Both documents are part of the overall procurement process but they serve different purposes.

They’re important for cost and inventory management, avoiding waste due to multiple orders for the same items and for ensuring that the vendor and buyer are in sync with regard to the contents of the order as well as their legal rights.

Read more: Purchase Orders vs Purchase Requisitions – how they are different.

Purchase orders are also different from invoices. While the buyer sends a PO to the vendor to confirm a purchase, the invoice is the other way around. The vendor sends an invoice to the buyer to request payment.

You definitely need both documents but they serve different purposes.

Read more: Purchase Orders vs Invoices – What You Need to Know.

What’s in a Typical Purchase Order?

A typical PO will have:

• A unique PO number for use by the finance department.
• The date on which the employee submitted the PO.
• Buyer and seller address, phone and email contact information.
• Shipping address for buyer if different.
• Line items for each item that was ordered including the product name/number, quantity ordered, unit price, subtotal for each line and the grand total of the order.
• Terms and conditions including payment terms, delivery terms etc.
• Any documents relevant to the order.
• One or more signature lines for company representatives.

The PO contains all information necessary for the buyer and the seller to agree on what the business has ordered, what is the cost, when delivery is expected and when the buyer expects to pay the supplier. The PO protects both sides if either makes a mistake.

Small Businesses Often Start With MS Office Templates

It’s tempting and easy to start with an Office template – an Excel or a Word document.

These templates are free, they contain all the necessary fields in a typical PO and you can simply customize them as required for your business. It’s how most small businesses start out.

Makes sense. After all, small businesses are, well, small. They don’t have a large I.T. department or resources to invest in skilled technical personnel. e-Procurement solutions like SAP Ariba are expensive and require pricey consultants to implement. Excel and Word are familiar and inexpensive. Naturally, small businesses digitize their purchase orders in those formats.

The Problem With Word, Excel or PDF Templates

We’ll assume you know how to customize Word or Excel documents – in my experience, it’s often a headache. A small change somewhere can easily throw off the whole alignment. That being said, the biggest challenge is hardly formatting. Here are just some of the issues:

• Purchase orders almost always require internal approvals before they are sent out to the vendor. Getting approval means emailing the PO around. Tracking where exactly the PO is in the approval chain is difficult when it’s in someone’s inbox.
• Each PO usually requires a signature. Typically that means print, sign, scan and email. That’s wasteful and inefficient.
• People often send it to the wrong person. That’s hardly surprising. In many businesses, a complex and confusing set of internal rules determine the right set of approvals.
• Word, Excel and PDF cannot easily validate entries so POs often have errors and omissions. That just slows things down and creates frustration.
• They can’t pull information from your inventory database or work with other business systems. The result is redundant data entry and delays.
• Reporting on purchases is also difficult if the information is essentially locked away in a filing cabinet or in email folders.

How an Automated Purchase Order Process Helps

Purchase order software can digitize your PO workflow so that it’s completely paperless, streamlined and efficient. The advantages are numerous:

• Employees can fill in the purchase order form online on any device. It automatically performs calculations, validates entries and ensures that errors are eliminated.
• Once completed, the system automatically sends it to the right people to obtain all necessary approvals. There’s no way to bypass requirements. It also sends notifications and reminders if approvers don’t sign the PO in a timely manner.
• Electronic signatures completely remove the need to print.
• Integration with SQL databases and other systems reduces the need to type in information that can be pulled in to the form.
• It’s easy to track where the PO is at any time via the built-in audit trail and task list.
• Since the system stores the completed purchase order documents and data electronically, it’s easy to search for and find any PO and to report on them.

Automation Is Easy With frevvo’s Visual, Low-Code Platform

Our visual low-code automation platform is so easy to use that we’re confident anyone can automate purchase orders. It includes everything you need to meet real business requirements including:

• Sophisticated forms with tables, attachments etc.
• Business rules for dynamic behavior
• Workflow routing
• Active Directory integration
• Custom PDF generation
• and more.

Read more: How to create a purchase order process that meets real business requirements

Pre-Built Templates Speed Things Up Dramatically

frevvo provides numerous completely free purchase order templates that you can try and customize for your needs. The templates include a basic purchase order form, one with SQL database integration as well as multiple workflows that route the PO for approval – some with basic routing and others with conditional routing.

You can try a template that routes from Employee to Manager to Finance for processing or try a different one that inserts a VP step in between the Manager and Finance. The VP step only executes if the PO amount exceeds $5,000.

If you want to customize a template, one-click installation is available for Cloud in most cases. The exceptions are security related e.g. when a template uses API keys or security credentials to access a SQL database etc. For obvious reasons, in these cases, we’ll ask you to contact us.

Accelerate Your Business With Automated Purchase Order Processing

There’s no reason to delay. The software is affordable and easy to use. It doesn’t require months-long projects or large investments. It’s easy to meet the most complex requirements. Better yet, you’ll prepare your business for the future since an automated process generates digital data.

With our pre-built templates, you can implement your PO in record time. What are you waiting for? Give it a shot today.

The post How Purchase Order and Purchase Requisition Templates Help Your Business Succeed appeared first on frevvo Blog.

Not only are manual purchasing processes slow and clunky, but they’re also error-prone. This can result in delays in procurement, poor vendor relationships and extra costs.

Purchase order process automation helps counteract these manual processing issues. Faster and more efficient, purchase order automation can streamline your purchasing processes.

But how do you automate the purchase process?

Here’s a step-by-step guide.

Want to jump ahead? Click here:

• What Does The Purchase Order Process Look Like?
• Why Automate Your Purchase Order Process?
• How To Automate Your Purchase Process

What Does The Purchase Order Process Look Like?

A purchase order (PO) is the official document that’s sent from a buyer to a vendor to request an order of goods. 

The purchase order process is part of your overall procurement workflow.

While the procurement workflow refers to the end-to-end process from requesting a purchase to order fulfillment to vendor invoice processing, the purchase order process starts once an employee creates a purchase requisition for approval.

The purchase order process can be as basic or as complex as necessary, but it generally has the same flow. 

Either the purchasing team or the financial department creates a purchase order. A superior staff member approves it. Sometimes this will be approved by other team leaders, especially if it’s a large purchase amount.

(Image Source)

Following approval, the purchase order is sent to the supplier who will supply the goods or services and send over a vendor invoice and payment terms.

After payment processing, you file all relevant documents to keep an up-to-date record.

Why Automate Your PO Process?

To put it plainly, manual purchase orders are clunky.

Not only are they inherently slow, as paperwork is filled out by hand, but delays in approvals can also hold up the whole workflow.

On top of that, manual purchase order processing is prone to error. Whether it’s illegible handwriting or incorrect data entry, mistakes slow everything down even further. Errors can also lead to wrong or duplicate purchases.

These mistakes often result in extra costs that go toward paying for more staff hours in order to remedy these issues.

Purchase order automation can streamline your purchase order system and cut out bottlenecks. This should improve the efficacy and efficiency of your purchasing process. 

Automated purchase order software will speed up repetitive tasks. According to 54% of employees, the automation of menial tasks could save your staff up to 240 hours per year.

What’s more, half of organizations agree that automation decreases manual errors.

Since fewer labor hours are needed for repetitive and remedial work, purchase order automation can cut back on labor costs. 

According to procurement professionals, cost-effectiveness is the number one benefit of switching to digital procurement processes.

Plus, manual processes aren’t as dynamic as automated workflows. 

With manual PO forms, there’s no way to hide information that is irrelevant to certain roles or to customize instructions based on the scenario. For example, internal approvals should not be visible to vendors and suppliers.

With automated purchase order software, you can create dynamic forms that streamline the logistics of the PO process. That way, each party only sees the information and instructions that are relevant to them when it’s appropriate.

You’ll also find that record-keeping is harder with manual processes. 

Not only does manual record-keeping take longer, as there’s lots of data entry, but there’s also a higher chance for errors in the audit trail. That can be problematic when it comes to compliance.

Purchase order software integrates with your record-keeping systems to keep everything up-to-date. As all data in the workflow is automatically validated as you go, you can guarantee that these records are correct.

Technology firm Pivotal modernized its purchase order process with purchase order workflow software.

Previously, Pivotal’s procurement team was manually managing its purchase order approval process through email. 

By implementing frevvo for purchase order management, Pivotal was able to automate its entire purchase order system.

The PO process pulls cost centers from Google Sheets to automatically populate purchase order forms. 

From here, these forms are conditionally routed to the correct approver based on information within the form and finally to the external vendor. All this is done to speed up the purchase approval process.

Not only do purchased goods now arrive on time, but the purchasing department no longer experiences paperwork errors or purchasing process delays.

How To Automate Your PO Process With Frevvo

Automating your PO process with purchase order workflow software brings countless benefits, including speedier processing, enhanced supplier relationships and cost-savings.

Here’s a quick guide on how to automate your PO process with frevvo’s no-code software.

1. Choose a Pre-Built Purchase Order Template

As with most purchase order software, it’s possible to build your digital purchase order from scratch with frevvo.

To make it easier, frevvo provides a full library of pre-built templates for procurement as well as other departments. Choose a pre-built purchase order template based on your unique purchase approval process.

In some cases, you may simply need a basic purchase order process template. If there are no conditions in the approval process, a basic template will suffice.

But, some purchasing processes require complex routing. For example, you may need a conditional approval process based on the cost of purchased goods. In this case, choose a template for a conditional PO process.

Remember, each purchase order template, and approval workflow is customizable.

2. Customize Workflow Routing

Next, customize the workflow so that your purchase order automatically routes through the appropriate steps.

You can add steps or take them away to tailor your purchase order approval process. 

You can also add and customize conditional steps in the workflow that only activate if the conditions are fulfilled. 

For example, you may add a conditional step that only routes your PO to a VP if the amount is over $100,000.

You can also customize information at each step. 

For example, you can assign steps to particular employees or managers. Alternatively, you can alter the wording in the messages and notifications.

At this stage, you can add escalations to prevent delays in the workflow. Escalations help to prevent bottlenecks where one person is holding up the procurement process.

For example, if an approver fails to sign a pending approval, an escalation will pass it on to someone else.

Safety Technology Holdings switched to an automated, complex purchase approval workflow to streamline its purchasing process.

Previously, the technology company had been using a mix of InfoPath, email, and custom-built applications to route purchase orders to either the CFO, VP, or CEO, depending on the invoice amount. Not only was it slow, but it was also error-prone.

Now, Safety Technology Holdings uses frevvo and enjoys complex routing that automatically sends purchase orders to the relevant approvers and suppliers. 

Automatic notifications and reminders that prevent delays and escalations are in place as a safety net.

3. Build a Dynamic PO Form

Build an online purchase order form with dynamic behaviors. 

Using the drag-and-drop menu, you can customize pre-built purchase order template forms or create your own from scratch. 

Add new fields, triggers, and messaging. Set these fields to show up for relevant roles only.

Template forms are already programmed to auto-populate with relevant data when connected to your SQL database. This can both save time and reduce data entry mistakes. Forms will auto-validate to make sure no incorrect data passes through.

Plus, dynamic forms will perform automatic calculations to prevent mathematical errors.

OESJ Central School District is thriving, thanks to frevvo’s digital dynamic purchase order forms.

Before, the PO process used paper and outdated processes. Often, teachers had to hand-deliver paper forms and wait for manual approvals. If there were mistakes, forms would be handed back, causing significant delays.

By switching to frevvo’s digital forms, OESJ easily created a dynamic PO form with the drag-and-drop designer. 

Thanks to frevvo’s complex routing and integration with Google Apps, forms head to the correct location automatically based on the information contained within.

Now that everything is filled in online and approvers can sign electronically, there are far fewer mistakes, and the whole process is much faster.

4. Create Business Rules for Dynamic Behavior

Once you’ve built the look and feel of a form, you need to program dynamic business rules so that your PO form behaves as you want it to.

Set business rules to control what each user sees, how the form routes, and the calculations that occur.

You can add and customize the existing steps as well as adding actions to each step.

5. Generate PDF Documents

Sometimes it’s necessary to generate PDFs for the purchase order process. Often, vendors will want custom PDFs for their records. Equally, you may want to save PDFs to Google Sheets for simple record keeping.

Luckily, dynamic PDF generation is simple with frevvo.

You can either generate PDF documents with information from your workflow or you can upload your own templates.

While PDFs are manually editable, these documents will pull relevant data into the forms automatically to speed up data entry. Calculations will occur automatically to reduce errors and accelerate completion.

Dynamic PDFs fully support electronic signatures to make approvals easier.

6. Set Access Control

Set access control on your workflow so that unauthorized personnel can’t initiate the purchase order process.

You can either set entry so the whole procurement team can access the workflow or delegate access to certain team members only. It’s even possible to assign access by individual or role.

Dynamic controls enable you to assign access to different elements of the workflow depending on the role of the person in your purchasing department.

Assign team members that can start the workflow, view and edit submissions, and access the audit trail. You’ll be able to limit who can edit the design of the process.

7. Integrate With SQL Databases to Auto-Populate Forms

To access the full capacity of automatic purchase order software, you need to connect your SQL database. 

With the Database Connector, forms will automatically pull information from your databases to auto-populate and auto-validate.

Not only does this accelerate data entry significantly, but it also helps reduce data entry errors. 

This is how ONEIL was able to speed up its purchasing process.

Previously, purchase requests and purchase orders had been run through InfoPath. The process was cumbersome, and there were lots of unexplained errors.

By integrating its SQL database with frevvo, ONEIL created dynamic purchase request forms and purchase order forms that pre-populate automatically. 

Thanks to the auto-population and auto-validation features, data entry is now more streamlined, there are fewer errors, and records are kept complete and up-to-date.

8. Create an Automated Audit Trail

To avoid compliance issues, your audit trail should be up-to-date, correct, and complete at all times.

The problem is that if you are updating your records manually, you may miss information, enter incorrect data, or add duplicate records.

Purchase order software like frevvo will automatically integrate with your record-keeping systems to keep your audit trail updated and correct.

Frevvo can post directly to your database or integrate with a number of different document management systems, including Sharepoint and Google Drive. You can also integrate frevvo with your network drive or save records directly to frevvo’s built-in repository.

Conclusion

Now that you know how to automate the purchase order process with frevvo, there’s no excuse for clunky manual purchasing processes.

Instead, improve efficiency, reduce errors, and cut out delays with purchase order workflow software.

Don’t just wonder about the benefits. Automate your purchase order process today with frevvo’s free trial.

The post How to Automate the Purchase Order Process: Step By Step appeared first on frevvo Blog.

You could certainly invest in a turnkey e-procurement system like Coupa or SAP Ariba. However, these systems tend to be expensive and often take a long time to implement. Usually, large organizations that procure a lot of stuff deploy these systems.

For the rest of us, there’s frevvo — a simple, affordable purchase order workflow system that can help you quickly digitize your purchase order processes. You won’t need to make major investments, hire expensive staff or spend months doing it.

Get started today and stop using Excel. First, let’s take a quick look at what exactly is a purchase order and what the PO process looks like at many organizations.

What is a Purchase Order?

A purchase order is one of the most common business documents. Buyers specify the goods and services they want to buy by creating a purchase order. It is an important document for both buyer and seller as it minimizes any uncertainty in the requested items /quantities and avoids any discrepancies or payment delays later.

You can read more details about what’s on a purchase order, and view some samples by reading our Definitive Guide to the Purchase Order Process.

Understanding the Purchase Order Process

This process can be quite complex.

The form has a lot of data – vendor details, buyer details, a line for each item being purchased with item codes, prices, subtotals. It may have discounts, taxes, shipping and other calculated fields.

The PO usually also needs multiple approvals and the associated signatures. Depending on your business standards, the approval chain could itself get complicated. For example, some companies require POs above a certain amount to require additional approval.

An accounting employee has to reconcile each invoice with the proper PO as well as with receiving to ensure goods and services were delivered before it’s approved and payment is made.

Read more: Purchase Orders vs Invoices – what you need to know

Finally, organizations must store POs & invoices somewhere. If you’re using paper, that means filing cabinets. If it’s Excel or PDF, that means a network drive or SharePoint repository. Searching for and finding a PO years later is tedious and difficult. Yet, it may be necessary to satisfy an audit.

Scanning and saving into an electronic document management system helps but that’s an expensive, manual process and is itself prone to errors.

Clearly, there are challenges but they aren’t insurmountable and you don’t need a big budget or a months-long project.

From paper to Excel

Until recently, businesses – unless they were large – would simply order by making a phone call, sending an email or a text message or even a hand written paper order.

These were inefficient and rife with the usual problems – misinterpretation due to lack of complete information, handwriting that’s indecipherable, unreturned phone calls, or even lost messages.

These methods lead to confusion and chaos due to lack of proper information flow and authorization.

So, organizations did the logical thing – they shifted to readily available digital options like an Excel spreadsheet. It’s a fair choice since Excel can perform calculations, it can be shared electronically and, in a pinch, can be used on a mobile device – a must in today’s world.

Excel is better but still has problems

Emailing Excel sheets around is an improvement over paper or verbal POs. You can be reasonably sure that POs won’t have calculation errors, they won’t be lost since email is trackable and digital storage is cheaper than filing cabinets.

Yet, there are numerous problems:

• People email the Excel to the wrong person for approval.
• Security is a concern – what if an employee accidentally emails the PO outside the company?
• It’s hard to be sure that no one tampered with the Excel data.
• Employees must print Excel sheets for signatures.
• There’s no way to validate for missing or invalid data e.g. wrong part number. An Excel error even cost JP Morgan more than 2 billion dollars.

In spite of these concerns, the business world still widely uses Excel. After all, it’s familiar and sort-of works. Not for too long. Organizations that continue to use Excel for their business processes will be at an increasing disadvantage as technology continues to advance at its current pace.

For example, Excel locks away your data in spreadsheets on network drives. You can’t think of taking advantage of modern technologies like machine learning (ML) to analyze this data (Excel ML add-ins notwithstanding). You won’t be able to derive valuable business insights to optimize and improve your processes.

That requires digital data and processes.

Process Automation to the rescue

The best way to address these problems and simplify the PO process is to transition it to a fully automated online workflow. Online workflows have numerous advantages:

1. Error free forms. Online forms validate data and ensure completeness. That means employees stop wasting time correcting mistakes.
2. Easy calculations. In most cases, users only need pick the items they’re buying from a pick list and enter a quantity. The form automatically computes all prices, subtotals, taxes, and the grand total.
3. Built-in mobile support means employees can submit, approve and sign anytime, anywhere and from any device.
4. Conditional routing, email notifications and automatic reminders mean employees can’t bypass business standards , skip necessary approvals or cause delays.
5. Digital signatures protect data ensuring that purchase orders are secure and tamper proof.
6. Integration with SQL databases, Active Directory and other business systems reduces data entry. The form automatically pulls in things like user information and inventory data.
7. Reduced paper usage. Less paper saves money wasted on physical space for storage as well as the cost of paper, ink etc. More important, it’s good for the environment and burnishes your sustainability credentials.
8. Digital processes generate digital data. It’s easy to store, search and retrieve. More important, it sets the stage for deploying advanced technologies like machine learning and artificial intelligence. These new technologies are fueled by large amounts of digital data.
9. Real-time analysis of data provides actionable business insights to optimize the internal process and react to a rapidly changing business environment.

Knowing all this begs the obvious question: why are companies still using Excel? Perhaps, they think that process automation software is cumbersome, expensive and they don’t have the skills to implement it. Nothing could be further from the truth.

Using Excel vs Process Automation for Managing Purchase Orders

Electronic purchase order workflows have numerous advantages over Excel. The good news is that it’s much easier to deploy process automation today.

Modern, visual software is easy and affordable

It certainly used to be the case that implementing business process automation (or BPM) software was a months-long effort with high costs and personnel needs. Indeed, some BPM software from large vendors like Appian and Pega Systems is indeed expensive and time-consuming. To be fair, those products have capabilities targeted to large enterprises.

However, modern low-code automation software like frevvo offer an easy visual system for automating everyday processes. You don’t need to be a coder-by-trade to use these tools. For example, our platform offers everything you need in a simple, easy-to-use package:

• Drag-and-drop form design.
• Visual, zero-code business rules for dynamic behavior.
• Drag-and-drop, wizard-driven workflow routing.
• Integration with SQL and other systems.
• Authentication using your existing Active Directory or other security system.
• Visual, drag-and-drop PDF mapping and generation.
• Analytics to analyze and optimize your processes.

Most important, electronic processes generate digital data paving the path for new technologies like ML and AI.

Check out the 6 min video below to see how.

Conclusion

Companies really need to get over their spreadsheet addiction and understand the long term impact.

Organizations that fail to take advantage of powerful yet easy-to-use online systems will not be able to reap the benefits of digital data and, over time, will become industry laggards. Those that understand the urgency and digitize their everyday operations will unlock rewards, boost growth and obtain higher ROI.

The post How to optimize purchase order processing. Hint – Stop using Excel! appeared first on frevvo Blog.

Yet many business owners are unfamiliar with each document and their specific roles within the purchasing process. As a result, people either misuse these documents or don’t use them at all.

Let’s break down the basics of the procurement process by exploring the difference between purchase requisitions and purchase orders.

What is a purchase requisition?

A purchase requisition is a document that an employee within your organization creates to request a purchase of goods or services.

When you fill out a purchase requisition, you are not yet purchasing anything. You are merely beginning the process of a purchase by asking for internal permission.

This document is used when an employee in your organization makes an order request if a need arises for certain goods or services.

The employee’s manager – or anyone in charge of purchases at your company – is notified that the employee has made an order request once they receive the requisition.

Purchase requisitions outline the details required before completing a purchase, should it be approved, such as:

• Product description and quantity
• Name of vendor
• Price
• Name and department of purchaser

Purchase requisitions rarely (if ever) leave your organization. Employees use these internal documents to obtain permission. As such, they are not a legally binding document.

Not all companies use purchase requisitions in their procurement process. In other cases, some companies require a purchase requisition for purchases going over a set dollar amount.

Additionally, the accounting department uses this document to plan for future spending. It’s much easier to avoid costly mistakes if you check the budget prior to approving a purchase.

Why do you need purchase requisitions?

Purchase requisitions detail out all the details of an order that your organization needs to make. So why not just skip the purchase requisition and go straight to the purchase order?

1. They help establish a clear procurement process. By rerouting permission to purchase to a common manager using purchase requisition forms, you can streamline your organization’s pipeline. The process is much easier to manage and formalize when there are clear rules for who can purchase what, and when.
2. They help detect and prevent fraud in your organization. The more steps involved in the procurement process, the more likely someone will sniff out a fraudulent purchase if it does happen.
3. They give Finance more direct control over purchasing. If someone from outside of the department needs to purchase something, they can fill out a purchase requisition and submit it to the head of purchases. This way, the same department oversees every purchase your organization makes.

How does a purchase requisition work?

Purchase requisitions are first filled out by an employee who sees the need for a product or a service. The employee fills in all the details, including the price, suggested vendor, and the specifics of the goods or services. The document is then sent to the purchasing department for approval.

Let’s say you are running a manufacturing company. You have a team of mechanics who do routine inspects and fixes on your drills, saws, and other machinery. If one of your mechanics finds out about a new type of equipment that would make their lives easier for routine checkups – equipment that your company has never purchased before – they could fill out a purchase requisition without needing to ask for permission first.

The mechanic files the completed form to the purchasing department. They take care of approving or denying the request for new equipment. Because the equipment is high-end, the head of purchases would check in with the finance department first to make sure this is a feasible demand.

What is a purchase order?

Also known as a PO, the purchase order is a document outlining the details of an actual purchase.

The purchasing department creates the purchase order once a purchase requisition has been approved. If an organization does not use purchase requisitions, other employees may fill in purchase orders for approval as well.

Unlike a purchase requisition, the purchase order is an external document. Purchasing sends it to the vendor as a set of instructions for how to fulfill your order and process your payment.

Note that POs are not the same as invoices — they are not a prompt for payment.

And once a purchase order form has been finalized and approved by the buyer and vendor, it becomes a legally binding document.

POs include everything the vendor needs to know to fulfill the order and everything your company needs to document the purchase:

• Name of your company
• Name of the employee making the order
• Date of PO creation
• Quantity and price of goods
• Payment terms
• Signature of all involved parties

How do purchase orders work?

Your organization creates purchase orders only when it wants to go ahead and officially purchase goods or services. When it has an approved purchase requisition, the purchasing department can create a PO from the information in the requisition. If the PO exceeds a set dollar amount, most companies demand approval of the VP before finalizing the document to send over to the vendor.

Let’s go back to our manufacturing company. Management decides to approve the mechanic’s purchase requisition for new high-end equipment.

From there, an employee from the purchasing department would fill in a PO. However, because the equipment will cost over $10,000, a VP must approve the PO before the purchase can be made.

The VP takes a look at the PO, approves it, and sends it back to the purchasing department, who takes care of sending the PO to the vendor and to their own accounting department.

Once the vendor receives and signs the document, the PO becomes legally binding. Now everyone – the mechanic, the purchasing department, the VP, the accounting department, the vendor – is in the loop and has read the same terms and conditions for a purchase.

So once the company receives their new equipment on a specific date, they’ll be expecting it.

What is the difference between a purchase requisition and purchase order?

Let’s quickly go over how each document differs:

The role of purchase requisitions and purchase orders in an efficient process

Whether you are a vendor or purchaser, your company can benefit from making your procurement process more efficient for all parties involved.

Without set rules and processes in place, employees waste lots of time running after lost information or fixing mistakes caused by misplaced paperwork.

One simple way to do this is by implementing easy to use, electronic purchase requisition and PO templates in your processes using procurement automation software.

Think of it this way – you need to spend your resources in the right place if you want to stand out and grow your business. Today, business process automation tools are readily available to give employees a head start even when they aren’t programmers.

By staying behind and constantly running around like a headless chicken to stay on top of who purchased what and when, you’re wasting a ton of resources. In the meantime, others will catch up to you.

Let’s bring back the manufacturing company as an example. If you’re using old school procurement processes, all of the resources you waste on procurement are resources you’re taking away from creating a positive client experience. Nowadays, there are plenty of modern manufacturing companies that your client can go to if you can’t give them the quality of service they know they can get elsewhere.

Here’s how this relates to another type of process – Netflix is changing the way people consume media content. Now, more and more networks are offering similar streaming services to remain relevant.

The same goes for automation.

Streamline your procurement process

It’s hard to run a business. Challenges will crop up everyday from an unsatisfied customer to an unexpected expense. Instead of chasing paperwork, you want employees to focus on customers and strategic matters.

Global trends strongly favor automation. Automate your everyday procurement processes using things like a purchase order workflow solution – the benefits may surprise you.

Wrapping it Up

From mid-sized companies to giant enterprises, so many businesses need to use purchase requisition forms and PO forms to their advantage to save resources, plan their finances more efficiently, and even protect themselves in cases of financial audits.

Without purchase requisitions and their accompanying POs, it can become a free-for-all in your procurement process – the costs of such mistakes can range from annoyances to major catastrophes.

Does your company have efficient forms in place for its procurement process?

The post Purchase Requisition vs Purchase Order: What’s the Difference? appeared first on frevvo Blog.

But what’s the difference between the two – and when would you use a PO vs an invoice?

And, how can you use workflow automation to streamline invoice processing as well as purchase order as well as invoice processing in your organization through workflow automation?

Read on to find out.

Want to jump ahead? Click here:

• What is a purchase order?
• Why do you need a purchase order?
• How does a purchase order work?
• What is an invoice?
• What is the purpose of an invoice?
• How does an invoice work?
• What is the difference between an invoice and a purchase order?
• Why do you need both documents in the procurement process?
• Streamline your procurement processes

What is a purchase order?

A purchase order (PO) is a document that clearly details the products or services your company plans to purchase from a vendor.

Buyers fill out POs and send them to the vendor, not the other way around.

The document outlines everything both parties need to know about the items being procured, including payment terms. There is no room for interpretation in a proper PO form. It will normally include:

• The PO date and a unique PO number for use by accounting.
• The vendor’s contact information including payment details.
• Line items for each item being procured including unit price, quantity and subtotal and a grand total for the PO.
• Signatures of each company representative as specified by internal business norms.
• Terms and conditions including relevant payment and delivery terms.

A typical purchase order might look like this:

Why do you need a purchase order?

1. They facilitate clear expectations – POs are a formal way of clarifying the procurement process for all parties involved. Expectations are clear for everyone, and when a disagreement occurs, the PO serves as a reference to clear up any miscommunications.
2. They enable companies to control spending – When an employee within an organization sees a need for a product or service, they can fill out a PO by themselves, get approval from their manager, send it over to the vendor, and finally to their accounting department for payment. When this process is automated using invoice approval software, everyone stays in the loop.
3. They help with budgeting – By gaining access to POs, the accounting department can plan accordingly for the future purchases to come – before they get surprised by the arrival of an unexpected invoice.
4. They are legally binding – In case of a disagreement with the supplier or a financial audit, POs provide legal cover. In fact, a federal court ruled in Virginia that purchase orders reflect an enforceable contract between two parties. The purchase order process will have an explicit vendor acceptance step.

How does a purchase order work?

Let’s take the example of a law firm with an office administrator. The office administrator ensures that the firm always has sufficient office supplies.

Afterwards, the administrator files this for approval to their manager. If the manager signs off on the PO, the administrator sends the signed document to Acme Office Supplies to begin the procurement process. The law firm’s accounting department also receives a copy so that they can budget in advance for this purchase.

What is an invoice?

An invoice is a document that requests payment in exchange for a product or service. A formal procurement process may not be required for invoicing – for solo practitioners, a discussion with purchasing might suffice.

Vendors send invoices. They may include:

• Name and price of product or services delivered
• Total amount due
• Payment schedule
• The vendor’s contact information
• Discounts (if applicable)

A typical invoice can look like this:

What is the purpose of an invoice?

1. They let vendors collect payment – The PO itself isn’t a prompt for payment – instead, it informs what the vendor needs to deliver, and thus, what will be shown on the invoice. In most cases, the vendor will not receive payment without first sending an invoice.
2. They help companies manage payments and cash flow – Invoices detail exactly what you are paying for and how much you are paying. With this data, companies can track payments and analyze expenditures in a formal way.
3. They provide legal protection – On its own, an invoice is not a legally binding contract. But, it might be part of a legally binding agreement when the other essential elements of a contract are met.

They provide written documentation for audits – Invoices serve as proof of exactly what your business paid for in case of an audit.

How does an invoice work?

Let’s bring back the example of our law firm that has sent a PO to Acme Office Supplies.

The law firm’s accounting department receives the invoice and pays on the specified date. Because they also received a PO beforehand, they had planned for the arrival of this invoice, they can corroborate it with the original PO, and thus don’t have any budgeting issues to clear the payment.

What is the difference between an invoice and a purchase order?

Here’s a quick recap of both documents:

Why do you need both documents in the procurement process?

Many businesses don’t use POs when a need arises for a product or service. Instead, they discuss a needed service by phone or email, then document the money trail with an invoice.

So why can’t you just use invoices instead of having so many types of documents?

POs ensure that everyone is on the same page before the vendor ships any items or actually performs work and bills the purchaser. It’s a protection blanket for both parties involved.

If a miscommunication happens and this isn’t clarified before the delivery of the service, you can end up goods  with an invoice that wasn’t originally what you thought you signed up for.

Let’s say Acme Office Supplies received a phone call from the law firm’s office administrator stating that they need fifteen crates of paper. As we all know, phone communications can easily get confused. What if Acme Office Supplies understood FIFTY instead of FIFTEEN?

If no PO was created, the law firm might suddenly receive a shipment and an invoice that is nearly four times as high as what they were expecting. And now, they have no written proof of the terms both parties agreed to. It’s a case of he-said-she-said.

In short, purchase orders define the terms of the sale before the sale occurs, and invoices confirm fulfillment of the order and that a payment is due in consequence. Overall, including both POs and invoices are key to avoid conflict and ensure everyone gets their dues.

Streamline your procurement processes

Running a business in itself is already challenging enough. You want your employees to focus on delighting customers and on strategic matters that will directly impact your bottom line. You don’t want them chasing paperwork for  day-to-day activities like procurement.

Every minute that your accounting department employees spend on a badly optimized procurement process is a minute they could be spending on the tasks they do best – the tasks that truly matter for your business.

Global trends strongly favor companies that have embraced automation. Automation of these everyday procurement processes can give you a major advantage in today’s fast-paced business ecosystem.

The Bottom Line

Purchase orders and invoices are crucial documents that are part of every company’s procurement process. It’s important to understand the similarities and differences, and why these documents are both important.

A streamlined and efficient procurement system that utilizes electronic purchase order forms and automates invoice processing can help your business run more smoothly and focus on what you need to do to stay competitive.

With electronic forms, your POs and invoices and work together in a single pipeline that minimizes paperwork and miscommunications.

The post Purchase Orders vs Invoices – What You Need to Know appeared first on frevvo Blog.