Improving your Purchase Order Process cycle

A budget holder often believes their budget is there to be spent as they see fit. They may see the finance department as the support network to help them with their budget availability information. A problem with having this perspective is that very little attention is given to the actual spend and purchase order processing (POP).

This lack of attention to POP can result in an FD finding out about a corporate spend when a purchase invoice arrives and not before, putting them on the back foot and having to adjust budgets.

This ineffective process is open to budget holders overspending without any knowledge or consideration of the corporate finances. The FD will then have to chase the budget holder to ask why they are approving purchase invoices for payment when, according to their monitoring, it is clear they do not have readily available budget to validate the invoice. This puts the organisation in a difficult position of having to honour the agreed invoice with extra corporate spend not previously allocated.

Automated systems and the right document management tools can make finance more visible across the company, provides the required structure and permissions for budget holders and often, lowers the finance department’s workload. With the right tools FDs can improve the purchasing order processing cycle within their organisation - from selecting suppliers down to generating the invoice and automating the approval process, while giving budget holders 100% visibility of workflows to assign invoices correctly and mitigate against overspending.

Improving purchase order processing can free up time, ensure budget holders have full visibility of their spend, and give FDs more time to spend across the business.

In addition to providing budget holders with increased visibility, an electronic PO system enables the finance department with visibility of company accounts at all times, with the assurance that the information is correct.

An automated POP system discourages departments operating in silos and provides them with a clear understanding of how their department is performing.

Ultimately, this will free up the FD’s time as they will not have to spend time chasing colleagues to justify their spend.

Want to know more? Download the Invu Purchasing product sheet