When it comes to purchasing goods and services for yourself, the process sounds very simple. You know exactly what is needed and how to buy it. Similar is the case with vendors. They give a product of your choice, you pay the price for it and it is done.
But, when businesses or organizations are involved, the process is not that simple. You need to establish a need, get approvals, deal with payments, manage time, and even take care of multi-way communication which may lead to data loss.
Besides, if the right online invoicing software is not used, your invoices can land in the wrong hands. Moreover, you lose track of the steps taken to create and sell orders. So, how can you sort out these things? Well, all you need is the right purchase orders and they will help you face the challenges of business procurement.
This post will discuss the right purchase order process, how to create them, and how to use them for seamless business operations.
What Purpose Do Purchase Orders Serve?
It is a document a buyer sends to the vendor and authorizes the purchase of goods and services. The complete purchase orders process details what’s being purchased, the amount, quantity, and also expected dates place of delivery.
Purchase orders are legal bindings and help both parties streamline purchases. But, who creates them? Well, they are created by buyers once the purchase is approved. Post that it is sent to the supplier. The 4 types of purchase orders include:
One of the most common POs is the standard purchase order. In this situation, the buyer are crystal clear on what they need to buy, delivery date, cost, quantity, and place.
In this case, the buyer knows what are they buying. However, the delivery date and quantity are not clear and are therefore left to estimate.
Blanket Purchase Orders
These kinds of purchase orders are used to get better pricing or get hold of delivery dates in advance. These are often used by law firms and consultants.
Contract Purchase Orders
This is an extension of a standard purchase order. It contains a signature page that is used by enterprises to stay secure. However, these are still used in rarity.
- Get the PO approved by the buyer.
- If you follow a proper procurement process, the process is preceded by requisition. The approval flow starts with the requester’s manager and the type of goods needed and then takes the consent of key stakeholders.
- Post that the buyer sends the purchase order via email or the ERP system. The vendor then needs to acknowledge the receipt of the PO.
- The vendor needs to fulfill the order as per the conditions listed in the purchase order. Once the goods are received, 3-way matching is done and final payment is made.
How to Create Purchase Orders Using Online
We suggest using an automated system for creating purchase orders. These will help you manage procurement operations and not get stuck in piles of unorganized papers. You will need to add the following information in your purchase order.
- PO number
- Details of the Buyer
- Shipping address
- A detailed description of items
- Quantity of goods
- Discounts (if any)
Tracking Purchase Orders
One way to track POs is via online invoicing software. You can also choose to track it with excel. But, it can lead to data duplicacy and other errors. Besides, manual methods also lead to difficulties in implementation.
So, to manage the entire PO process, you will need a proper process and ensure a full audit trail related to every purchase. This will ensure that you always get your goods and services on time and follow the best practices. These are little but must-do- steps to streamline your operations.
This was all about having the right purchase order process and online invoicing software. If you follow the above-mentioned- process you will be able to create the right purchase orders and build good relations. So, take the plunge and invest in a good tool today and make your admin team heave a sigh of relief.