November 7th, 2018 • Procurement Process • purchase order
The world is a chaotic place. You have thousands of details to juggle on any given day, and any number of projects seem on the verge of falling to pieces any minute. And who knows it better than the procurement team?
One surefire way to reduce all that chaos is to streamline your purchase order approval process. Conventional PO processes are time-consuming, needlessly expensive, highly susceptible to human errors, and nearly impossible to gather insights from later.
A cloud-based purchase order approval application, integrated with an intuitive procurement suite, can mitigate all those issues. With a procurement suite, you can effectively manage purchase order approval within the context of your entire procurement process.
Purchase order approval is the flow of actions required from various stakeholders to validate a PO and bring it into effect. For any purchase order to be a legally binding contract, it must pass the internal approval processes of both the buyer and vendor.
Purchase order approvals vary in specifics from one organization to another. However, the basic flow remains similar. Here’s a brief outline of how a typical purchase order approval process may function.
The business unit that has the requirement raises the request to the purchasing or procurement team in the organization.
The procurement team then assesses the request thoroughly. At this stage, budgets and document checks are also carried out.
Based on the organization’s rules of purchase order approval, the procurement team may reject or approve the request. In cases where the request is rejected for lack of specific information, the request is sent back to the team that raised it, often resulting in multiple back-and-forth exchanges before all the requisite information is recorded.
Once the procurement team approves the request, the PO is prepared based on the nature of the order. While preparing the PO, details such as the buyer’s information, vendor’s information, PO number, order details, and payment information are entered.
The buyer’s organization then sends the completed PO to the seller.
A purchase order is deemed legally valid only after the vendor approves it.
The vendor typically examines the offer in one of two ways.
A. Existing customers:
In the case of repeat customers, the seller checks if previous invoices have been paid and no outstanding payments are due.
B. New customers:
When first-time business is being considered, the supplier checks to verify buyer information as well as their ability to make payments on time.
Once the initial checks are carried out, purchase orders are sent to the approving authority to formally accept on behalf of the vendor. The approved PO is thereafter considered to be a legally binding contract between the purchaser and supplier.
Free 14 day free trial
When your purchase order approval application is part of a comprehensive procurement suite, purchase order approval is a breeze.
One of the most time-consuming aspects of creating and processing purchase orders is gathering (and verifying) all the information you need. When all that data is stored inside a unified procurement suite, your purchase orders can be automatically populated with vendor information, pricing, shipping details, and more, leaving more time to focus on the intellectually challenging parts of the organization’s work.
In addition to being time-consuming, traditional purchase order procedures are ripe for human error. With an integrated solution, information is automatically imported from vendor profiles, requisition requests, and pre-made forms, leaving fewer opportunities for mistakes.
A cloud-based purchase order approval solution keeps you organized and is good for the environment. You can process all purchasing-related documents in a single, touchless stream of digital exchanges. Send rejected requests back to the originator with points for correction, make amendments, and submit final approvals without ever printing a page.
Work with your vendors and procurement team in real-time and avoid conflicting versions of documents by utilizing a digital workspace where everyone has visibility of every PO they’re working on and all the information they need.
Enforce compliance and prevent maverick spend via automated three-way matching (invoices to contracts, POs, goods received notes and service entry sheets).
If your organization wants to stay ahead of the competition, you have to be fast and accurate. Kissflow protects organizations from inefficiencies of time, money, and effort with solutions that keep the future in mind.
Kissflow facilitates faster purchase order approvals with real-time notifications and effortless tracking with comprehensive dashboards. Cloud-based online solutions like Kissflow eliminate possibilities of human error and enable transparent processes. No more chaos, miscommunication, or inefficiencies.
Looking for the best way to perfect your purchase order approval process? Sign up for a free, customizable Kissflow demo today to see what a procurement suite with simplified, efficient purchase order approval can do for your business.
Free 14 day free trial