Companies admit their purchase orders system is broken. Here's what they're doing about it
Purchase order (PO) struggles are more common than you might think. Many organizations deal with accidental orders, unclear policies, overspending, inventory issues, and inflexible or unreliable suppliers on a regular basis. Whether you're a new business or an established organization, PO automation is the solution to many of these problems.
In this blog, we'll talk about some of the more common PO process struggles, and how AP automation can help.
What's the difference between a PO and an invoice?
Let's start with the basics, and the difference between a PO and an invoice:
Purchase order (PO): A PO is sent by a buyer to a vendor to track and control the purchasing process. It typically contains order details such as cost, quantity, and total.
Invoice: An invoice is sent by a vendor to a buyer as a formal request for payment. Similarly to a PO, it typically reflects the cost, quantity, and total.
Based on this information, we can easily understand why it's so important to optimize your invoice workflow — getting paid is crucial to the success of every organization! But why is it so important to automate your PO process? Let's get into it.
What is a PO system?
A PO system documents and controls who is allowed to make purchases within a company. When it's set up correctly, it provides the following benefits:
- Visibility into upcoming payments to understand and manage cash flow in real-time
- Clarity about who is approved to make purchases
- The ability to ensure proper approvals are followed for every purchase
If a PO system lacks automation, it can become a dangerous point of failure when it comes to a company's overarching AP workflow, and lead to overspending, cash flow mismanagement, and fraud.
How Quadient's automated PO system improves the bottom line
By automating purchase orders with Quadient AP, you can easily track your committed spend online and in real-time. You can enforce budget restrictions or spend-limits based on customized categories like department, project, and vendor, while ensuring you account for all the goods that have been ordered. Here's how it works.
Budget management
Quadient AP assigns a PO number to each requisition, ensuring that you only pay for items you receive. This also helps your AP team break down information silos around purchasing, to better analyze upcoming spend and facilitate 3-way automated matching.
Purchasing controls
Quadient AP helps you create a formal, customized purchasing process that controls who is able to buy what and how much money they can spend. You can set spending limits based on department, project, or vendor, or set manager budgets to control department spend.
Cost-savings and opportunities
Quadient AP will help your AP team realize several additional cost-savings and opportunities:
- Online requisition submissions help approvers easily identify purchase patterns and place bulk orders or request volume discounts
- Streamlined AP workflows are accelerated and seamlessly synchronized in the cloud
- Fully automated PO systems minimize team frustration and reduce your risk of AP inconsistency and fraud
A case study in success: Athabasca Catering
When a company relies on a manual PO system, the oversight and approval processes are weak, clunky, or in some cases — as Athabasca Catering experienced before implementing Quadient AP — nonexistent. As a result, they had little-to-no visibility into who was spending where, and on what. Not only was that concerning from a financial perspective, it opened them up to opportunities for fraud and other AP challenges. As the company expanded, it became critical to gain back visibility and control.
"Previously, the company had no POs at all, and no approval process for purchases. This meant that anybody could basically purchase whatever they wanted"
- Robert Cremers, Director of Finance and Administration, Athabasca Catering
All of this changed, for the better, when they implemented Quadient AP's PO module. Athabasca Catering is now able to track approvals and employee spend online, while also going paperless and reducing their manual data entry time by 60%.
"Being a finance guy that was kind of exciting to me to see that, finally, we're going to have some control over who purchases what"
- Robert Cremers, Director of Finance and Administration, Athabasca Catering
Empower your AP teams with Quadient's automated PO process
Quadient AP provides your AP team with the tools they need to automate the PO process and take back control over AP workflows. Book a demo with us today to see how Quadient AP can empower your team to take control.
