10 Important Ways That Using Purchase Orders Benefits Your Company
The last thing your business needs is more paperwork, am I right? Sometimes it seems like all the documents and files and records just make things more complicated instead of simplifying your workflow. So why would you use a procurement system that requires purchase orders? Aren’t they just another document that says the same thing an invoice does?
Actually, purchase orders are a key aspect of maintaining accurate, complete financial records. They might seem like just an extra piece of accounting paperwork, but when you know how and when to use purchase orders they have far-reaching business benefits. Keep reading to discover 10 reasons why you should use purchase orders and learn how they will benefit your company.
The few extra minutes it takes to generate purchase orders save time in the long-run. An established purchase order system simplifies the ordering process. With NextProcess Procurement Solutions, you’ll save even more time since extensive automation streamlines PO creation and order placement. You’ll also save time when orders arrive since all you have to do is check the invoice against the purchase order to make sure the order is correct.
Help With Budgeting
If you’re planning a large project, purchase orders can help with budgeting. In order to generate accurate POs, you’ll have to calculate order quantities before the project begins. And it’s not just good for big projects. Even when dealing with every-day purchases that come up in running the business, the price and quantity fields on purchase orders give you clues about how much your company needs to sell to make a profit.
Careful purchasing records help you anticipate and plan for the future. They provide key insight into company performance that you need to examine product trends, market cycles, and company spending. Most purchase order systems will generate this information, but you also need to look for one that makes the information easy to access. NextProcess puts all this info at your fingertips, letting you review detailed records as well as track budgets, receipts, invoices, and more.
Handle Unexpected Expenses
Using purchase orders can act as an early warning system for unanticipated expenses. Imagine a situation where one department has a large expense come up that they hadn’t planned for. They place an order and accounts payable doesn’t hear about it until they get the invoice. Then there’s a lengthy approval process to go through. Having a purchase order system brings upcoming expenses to light earlier. That helps with budgeting, planning, and communication.
Purchase orders provide a record of exactly what you ordered and at what price. They’re designed to clearly communicate all the details of a purchase. Having documentation like this protects you from ordering mix-ups, such as someone misinterpreting an order placed the phone. Once your team learns how to use purchase orders, you can reference these documents any time there’s a disagreement about what was ordered and use them to fix any goof-ups.
Provide Legal Protection
Purchase orders also act as a legal document. Having a written agreement regarding the prices and quantity of items in your order protects both you and the seller. Purchase orders protect you by giving you a legal, enforceable record of exactly what you ordered. It also guards your company against unexpected price increases. If you receive the wrong quantity or type of items, or if you’re charged the wrong amount, you can go back to the purchase order to help resolve the issue.
Implementing a purchase order system lets you control who is allowed to make purchases. This feature prevents unauthorized people from placing orders without clearance. It can also limit which items are purchased from which vendor. Setting up automatically enforced policies is a big step toward curtailing maverick spend. NextProcess’s procurement system offers extensive customization, letting you limit your employees’ purchases company-wide or to certain items per vendor.
With an automated procurement system keeping all your purchasing information in one easy-to-search place, it’s simple to track where the money is going. The NextProcess system updates in real-time, so you can always see exactly what purchases have been made. You can set up email notifications to alert you about important details, or check the application manually from any device with internet access.
Setting up a purchase order system also gives you tools needed to keep track of your vendors. The documentation purchase orders provide also give you insight into which vendors are easy to work with and which ones are not. A purchasing system makes it easy to see if your vendors fill orders accurately and on time or if they’re behind schedule and prone to mistakes. That helps you catch poor vendors early and prioritize working with the vendors who are good for your company.
Improve Inventory Management
Purchase orders are the first step in procuring inventory. When you have an easy-to-use purchase order system, it helps with inventory management. Purchase orders help you keep track of what products should be coming in and check new invoices for accuracy, so you know exactly what’s happening with your incoming inventory.
Ready to take control of your purchasing and procurement? Contact NextProcess today to request a demo or learn more. We’ll be happy to show you how our purchase order system can work for your business. And if you do decide to implement a purchase order system, we’ll be right there helping you through the entire setup process until it’s working perfectly.