What is the purchase order approval process?
Purchase orders are crucial in the AP department to keep track of spend and make essential decisions that impact the bottom line. Purchase orders are also used to legally reflect the agreements between the organization and its vendors to ensure the terms are met. The manual processes of the past meant purchase order approval could take days or weeks.
With that in mind, organizations need an efficient PO system to ensure a timely purchase order approval process and timely payments. In addition, a greater understanding of the purchase order process supports the need for cloud automation to follow current AP best practices.
What is the Importance of Purchase Orders?
A purchase order informs vendors where to deliver products and where to send invoices, creating a contract. Purchase orders create a necessary paper trail to specific pricing and other order details. Additionally, POs create legally binding agreements, memorialize contractual arrangements, and keep track of finances to secure the best possible deals from vendors.
Plus, purchase orders help avoid duplicate orders and make it easier to keep track of incoming orders and catch pricing variations. As a result, POs can help schedule faster deliveries, enable compliance with auditing requirements, and improve overall financial and inventory management while establishing clear communication with vendors.
What is the Purchase Order Approval Process?
The purchase order approval process requires different stakeholders to validate the PO. Once the purchases order passes the internal processes of the buyer and vendor, it becomes a legally binding contract between the parties. Approval works by raising a request, vetting it, getting approval or rejection, and preparing and assessing POs for new and existing customers. Manual PO processing requires significant time and human resources at an expense to organizations.
Conversely, a cloud PO system means instant approvals in real-time from any location, streamlining the purchase order approval process. In the days of manual processing, invoices may sit on a desk for days awaiting approval. And multiple rejections could go back and forth for simple information that can be entered into the cloud instantly. Now purchase orders are approved in minutes, supporting timely payments and creating opportunities for early payments to get potential discounts from vendors.
How Does the Right Cloud PO System Make a Difference?
The right cloud PO system makes a notable difference by streamlining operations. For example, intelligent matching of purchase order invoices supports end-to-end, fully automated, and touchless processes. In addition, the data obtained via OCR capture on a PO invoice match the data on the PO and good receipt, enabling automation to perform automatic matching. As a result, automated 3-way invoice matching is far more accurate and efficient than manual processes subject to inevitable human error.
Going touchless and paperless reduces human error, eliminates fraud, and saves time. Cloud automation supports remote collaboration and real-time updates that keep everyone well-informed every step of the way. Additionally, automation supports compliance and simplifies the issuance of monthly and annual reports, taking the pain out of these processes. Plus, automation also handles non-PO invoices and approval processes. The goal is to choose a system that suits the organization and its unique approval processes, such as Procure-to-Pay, making invoice matching more secure and reducing fraud.
Accuracy in the purchase order approval process is crucial every step of the way to eliminate errors, reduce fraud, and ensure the agreements between the organization and vendors are met. Cloud automation provides real-time financial data to support intelligent decisions about procurement, production, and profitability.
