The ever-increasing demand for speed and efficiency in the contemporary industrial setup has forced companies to automate their workflow for tasks that were once handled manually and were repetitive in nature. Process automation is coming in handy at a time when the highest quality standards are a prerequisite for any business to flourish in a short time. Technology has given companies the right tools for automating the workflow and minimizing the costs incurred to carry out such processes. Purchasing is one such process that is a critical component of any business and requires monitoring 24X7 to get results.
Purchase order and its significance
A purchase order is the first formal document that starts the procurement of goods or raw materials in any organization. Companies need to present a purchase order to the vendor of their choice to ensure that you will purchase the goods from that same vendor. A purchase order has all the necessary terms and conditions followed by the procuring party and the seller.
A purchase order is significant in the whole workflow because:
- It clearly mentions the particulars of the goods, their cost and expected time of delivery of the goods
- It clearly points out the terms and conditions, such as credit period, taxation, safety protocols, delivery and payment terms, etc.
- It gives a clear picture to other related departments about the timeline for goods procurement
- It allows for tracking the budget and process workflow
A Cycle Of A Purchase Order
A purchase order starts with the intent of procuring goods and ends with the final payment of all pending invoices. It is a legally binding document between the buyer and the seller and a reference point for all purchases carried out within the organization.
Once the purchasing department selects the vendor/vendors for procurement, they issue a formal PO to the vendors who qualify on the terms and conditions.
As soon as the vendor acknowledges the PO, it is considered open and starts the procurement process. Acknowledgment signifies that the vendor can deliver the goods within the timeline agreed upon by both parties while maintaining the quality standards.
As the goods are delivered to the buyer, the PO is said to have been delivered. A Goods Received Note is generated concerning the PO that signifies that the order is well-received and completed.
The buyer should pay off all the outstanding balance against all invoices related to that particular PO to close the PO. A closed PO means that the order is fulfilled from both the parties’ ends without any issue.
Automating Purchase Order Tracking
Organizations that procure large volumes of goods or raw materials on a daily basis need to optimize the purchase order workflow. It means that all the steps in the process that was once dependent on the manual workforce are now handled with the help of technology.
Workflow automation is an effective way to optimize the whole procurement process. Purchase order tracking is the most critical process that needs due diligence at all times. An automated purchase order tracking has the following benefits:
- Speeds up the process by reducing the time taken for creation, approval, and routing of the PO
- Eliminates redundancies and centralizes the data
- POs can be easily accessed through the database by all authorized personnel to track the progress
- Centralized data helps in keeping a check on the cash outflow and budgetary requirements
Workflow solutions software and tools are helping organizations save a lot of resources that you would otherwise spend on low-value tasks in the workflow processes. For example, digitized purchase order tracking saves time for organizations and proves efficient in managing large volumes of procurement within a limited timeframe. It is high time that companies migrate to technology to effectively manage their business and, in turn, maximize revenue.