Why 2023 is the Year of PO Management

Despite this, too many finance departments are still struggling with outdated processes and time-consuming manual tasks. One such issue is manual purchase order (PO) processes which are labour-intensive, costly, and increase the risk of inaccuracies due to human errors.

This is especially frustrating as technological advances have already made fast and efficient PO management possible.

That’s why now is the ideal time to embrace PO management tools to streamline this vital business function. This will stop finance teams from being held back by antiquated manual processes and bolster your company’s defences against a shrinking economy.

Seven Common PO Challenges

There’s a reason organisations are moving away from manual processes, not least of all because they are time-consuming and tedious for the employees involved. However, in the case of purchase orders, these processes come with too many challenges that finance teams must overcome. Some of the most common challenges include the following:

1. Increased time spent and costs associated with existing PO processes.
2. Tackling inefficiencies and errors within PO processes.
3. Acquiring, storing, and sending out POs through lengthy and time-consuming approval channels.
4. Loss or damage of purchase orders.
5. Siloed operations, leading to a lack of visibility across departments.
6. Process bottlenecks and compliance issues.
7. Spikes in organisational expenses.

These are just some of the common issues companies face due to antiquated laborious PO processes. Additionally, each business needs to tackle its own internal problems on top of these challenges, which can be frustrating and lead to decreased efficiency.

Eight Benefits of PO Management

By embracing PO management this year and choosing the right management tools, your finance departments can ensure that every purchase is necessary, justified, and optimised for cost. That isn’t the only benefit of implementing an effective PO management solution.

1. Handling incoming orders—PO management can quickly improve the managing and tracking of all incoming orders, helping reduce process bottlenecks.

2. Planning for the future—With complete visibility into what’s been ordered and when it‘s easier to see what is still needed and plan future inventory accordingly.

3. Budgeting—For finance teams, one of the biggest benefits of a PO management system is setting and managing budgets more successfully by gaining a better understanding of previous spend and order frequency.

4. Approving invoices—Invoicing is the final stage of the procurement process. Effective management makes approving and paying vendor invoices faster since the transaction was already approved during the PO stage.

5. Real-time data and updates—The right tools should provide the finance department with real-time data and updates. This helps streamline processes and even alerts relevant team members when updates occur.

6. Tackling errors—By reducing the paper trail and streamlining processes onto one platform, it is easier to identify and tackle inefficiencies while reducing the risk of errors in the first place.

7. Increased visibility—Using the right tools gives relevant departments and stakeholders quick and easy access to relevant data. This increase in visibility helps break down silos and encourages interdepartmental collaboration.

8. Boosted security and compliance—Reducing the paper trail and utilising new technologies can help finance teams tackle compliance issues whilst increasing data security. This is important for meeting General Data Protection Regulations (GDPR) requirements.

As you can see, there are a number of great reasons why your company should embrace PO management tools this year.

Streamlining PO management

Suppose you want to transform PO management within your company so you can gain greater financial control and reduce financial risk. In that case, you need to consider several things, and embracing automation and relevant PO management tools will be vital to that transformation.

Below are some of the ways you can streamline your PO processes.

1. Digitise your POs

Have you already begun using electronic purchase orders?

If your company still relies on paper purchase orders for some or all of its suppliers, it’s time to make the switch and ditch the paper.

Making the transition to an all-digital system reduces the chances of damage or loss to a PO and minimises the risk of duplicate invoices and human error. It also makes editing, amending, and searching for POs more accessible and readily available.

2. Centralise your systems

Rather than storing copious amounts of paper documents and PO information in filing cabinets, multiple folders, and across several large spreadsheets, choosing a single location for all PO-related information can help streamline processes, reduce the need to input data across multiple systems, and increases overall efficiencies.

A centralised system for your purchase order process means PO data is accessible to any employee or leader who needs to access them. With the rise of cloud-based computing, POs can be accessed worldwide, making it the ideal solution for remote and hybrid teams.

Having this information in a single system makes managing corporate spend more straightforward and cuts down on time-consuming and repetitive manual tasks.

3. Automate the authorisation process

Another way of streamlining operations is by setting up automated authorisation and approval processes. That way, when an employee submits a PO request, it will automatically be sent to all the relevant stakeholders for approval, reducing bottlenecks and cutting down on approval times.

4. Link POs to budgets

Linking individual POs to their relevant departments and project budgets is another excellent way to streamline PO management while offering increased visibility into cash flow and corporate spend.

PO linking relies on having a centralised payables system in place and can help the finance team quickly monitor budgets in danger of being exceeded and whether a PO should be approved.

By organising your PO processes and managing them as effectively as possible, you can save your company time and money and better plan for the future.

Learn how you can modernise your company’s purchasing operations with Tipalti's PO management tools.