NEW CROPPED instasupply logo.png

10 Reasons You Should Invest in Switching to Online Purchase Orders

B2B Tech Business Spend Control

Purchase orders (POs) have been playing an important role in controlling business purchases for businesses throughout the world for decades. Whilst many companies still spend a lot of money without POs, let's just say the smart ones are the ones using them.

As technology advances have pretty much revolutionized every single thing we do in the past few years, so too are online purchase orders the new generation of POs. In this post we will cover the top 10 signs you should invest in online purchase orders and online systems that allow you to control spend in a much safer and more effective way. 

Firstly, what is an online purchase order?

Much like its predecessor, an online purchase order is a legally binding document that provides suppliers with proof that services or products were ordered. They also confirm the costs of the services or products ordered. Currently,  an online purchase order will be matched up to a delivery note and an invoice before a payment is made. 

What data does an online purchase order include?

Online POs will typically include the name of the company purchasing the goods or services, the date of the order, the SKU of the product/service required, the description of the product/service, the quantity & the price. It will also carry a unique PO number which will need to appear both on the delivery note and the the invoice linked to the PO to ensure a controlled transaction. 

Any other information such as mailing address, payment information & invoice address are already contained within the online purchase order when using a spend control platform. 

What about the process?

The online purchase order process follows similar, yet vastly simplified, steps as the offline purchase orders of old. Ensuring all steps are followed is much easier when AI driven automation is applied.:

  • Purchase order is created at need level – This step would have typically followed a requisition order in the old purchasing format. When moved to an online spend control platform however, the roles employees have within the organization determine their ability to raise purchase orders up to certain amounts and from specific suppliers. By submitting the purchase order electronically, it can automatically be sent for approval internally.
  • Purchase order is approved or denied – Once the PO has reached the approval chain, it will go through all steps until it gets to final approval. With a platform like InstaSupply, multiple variations and permutations of approval levels can be constructed - linear, cascading, based on value, supplier, line item etc. All approvers are notified electronically of POs pending their approval. Once a PO receives final approval, it is instantly sent to the supplier.
  • Supplier approves or rejects PO – All suppliers are instantly notified when a new PO arrives when operating with online purchase orders. The lack of transparency, human error or admin delays are removed from the process. The supplier must check items, quantities, prices and total amount. When the supplier is satisfied they are able to fulfill the order, they mark the PO as approved within the platform.  The buyer then knows they can expect the goods in the next delivery. If items are out of stock and there is no approved substitute list, the supplier can record notes on the online PO or contact the buyer directly if the matter is urgent.
  • PO is delivered – A key step in a flawless online purchase order process is recording deliveries. When receiving the goods, the PO must be marked as fully received or partially received so no spend is uncontrolled. By having all POs online, a system of record is established that will allow not just a thorough control on stock and spend but key indicators of a supplier's service levels.
  • Invoice is matched to PO and delivery - The final piece in the purchasing puzzle is the invoice matching both the PO and the delivery. As a purchase order is a legally binding document, no variations should occur to the value and specification of the PO. Should a discrepancy occur and the documents do not fully match, an automated online platform will alert you as soon as a discrepancy is flagged. This allows for immediate action and speedy resolution of any issues.

By automating and ensuring a full online powered process, transactions can be finalized a lot quicker. This is to the benefit of both suppliers and buyers since no money is lost and payments are effected a lot quicker. 

What are the 10 signs you should invest in switching to online purchase orders?

  1. Everything in one place, accessible from anywhere in the world, in real time – The main problem with "standard" paper or indeed Excel POs is the lack of organization and the speed with which they move through the purchasing process. From the moment a PO is raised to the point it is fully approved and ready to be sent to the supplier, many unnecessary manual tasks are performed. As they are performed offline, no real visibility is to be had on a certain PO until it returns to the originating buyer. Any changes or adjustments are therefore contingent on the speed with which the paper/email document moves through the chain.

    With online purchase orders, everything is visible in real time and can be accessed by multiple people in the chain at the same time. 
  2. Approvals can happen a lot faster – As detailed above, by having all purchase orders online, the levels of approval a certain purchase has to go through before it is sent to the supplier are significantly sped up. By removing the need to return the PO to the originating buyer, the online PO can be automatically sent to the supplier as soon as it's received final approval.

    Online notifications typical to a spend control platform like InstaSupply for instance, speed things up even further by alerting approvers of online POs ready and pending their approval. Because everything is handled online and in real time, approvals can be handled on the go, even from a mobile device. We have many clients who approve purchases whilst on the train traveling into work or before boarding a flight. 
  3. Online POs save time  – Switching to online purchase orders makes the entire buying process a lot easier and more efficient. By loading and using PO templates or organizing standing orders and recurring POs, staff time spent on the admin of raising manual POs from scratch is dramatically reduced and a consistent client service can be provided. Through online notifications and automated actions, the buying process becomes a smooth operation that can be handled on the go, from anywhere.
  4. Online vendor management – By on-boarding and managing all suppliers online, a business can easily update, manage or even source suppliers to match their needs. The arduous processes of ensuring the entire business sticks the the same price list and the same supplier for a certain item is a thing of the past.

    Accessing supplier catalogues online to match your bespoke price list and limiting access to the product list by company role enables spend control in real time across the business.  The days of thumbing through paper catalogues or scrolling through a never ending list of products for the right item are gone! 

    We have taken vendor management one step further, in fact. We now score all suppliers in real time based on a set of five criteria ranging from price, engagement, service levels and satisfaction levels of other customers using them. Businesses can therefore easily take action when a supplier is under performing without having to embark on a costly audit of their supplier base against market standards.
  5. More transparency – By investing in switching to online purchase orders and on online spend control platform, you gain access to insights and actionable intelligence typically hard to come by in manual, offline environments. Using AI to track, analyze and report purchase data, the decisions your business makes can be timely and always fully informed.  By tracking everything in real time, you are always in the know when it comes to the health of your business.
  6. Help managing budgets – Once an online purchase order is accepted by a supplier, the value comes off the budget of the issuing department. By managing budgets in real time, all departments (and the business as a whole) is aware of what is being spent. Being in control of spend as it happens and automating budget management, unauthorized and uncontrolled spend can be eradicated, saving hundreds of thousands in misspent funds every quarter.
  7. Order status at a glance – Tracking the full journey of an online PO enables timely status updates. When a supplier is unable to deliver an item/full order, the status of your online PO will reflect this so other arrangements can be made. No more surprises, short deliveries catching you off guard and disrupting normal service.
  8. A vital part of audit trails –  Goods and services coming in and payments going out are what auditors are interested in when looking for anomalies. Tracking all purchasing activity online is a clear system of record that will enable auditors to inspect the full process in half the time needed in manual audits. 
  9. Protect from fraud - By maintaining an online system of record of all purchasing data, you are in effect protecting your company from fraud. No offline processes can take place without your knowledge and any fraudulent financial activity can be prevented or at the very least, flagged as soon as it occurs. 
  10. Help evaluate staffBecause all activity for each user is recorded online, businesses can assess staff performance, engagement levels and even match any discrepancies/anomalies in spend with certain members of staff. By tracking all user activity, you can not only prevent any staff fraud but also reward productive/hard working members of the team based on clear data.

So there you have it, the 10 reasons you should invest in switching to an online purchase order process. By leveraging automation and the power of online records, you can not only maintain a clear and transparent system or record but benefit from a system of intelligence as well. Ensuring you work with the right suppliers, sticking to budgets and protecting from fraud are key to a healthy and profitable business. 

Free eBook

Guide to Invoice Fraud Safety

Fill out the following form to access the guide.