The Importance of Purchase Order Management in Business World

Along with the increasing demand for products, business processes are becoming increasingly complex. Previously you could easily order materials from suppliers by phone or email, but now the supplying process is no longer easy to manage. Now to order materials requires a purchase order management.

PO or purchase order is a document created to show the goods you want to buy from the seller. In other words, PO is also a sign of a contract that forms an agreement between the buyer and seller regarding the goods ordered. Your business needs to use Procurement Software to help generate purchase requests and turn them into purchase orders instantly.

In addition, this purchase order can help your business to ensure that every purchase that has been made is within the business budget. This document contains the order details of the buyer’s needs, such as quantity, type of goods, price, and date or number. The demand for goods is increasing, and of course, if it is done manually, the purchase order maker will be prone to errors.

Therefore, your business needs procurement software to help create purchase orders instantly, approve or disapprove purchase requests from all departments, locations, or employees and others with just one click. One of the best procurement software providers is HashMicro.

Also read: 7 Steps of an Effective Procurement Process and How to Improve it

The Meaning of Procurement

Procurement is acquiring goods or services from external sources (vendors). This task is perform for business purposes. In this process, clients consider various factors, including quality, quantity, timeliness, and others.

The procurement procedure enables businesses to avoid any deception or fraud. The procurement procedure ensures the correct acquisition of a product. Purchasing actions can be split into two classes:

• Direct Procurement: This is production-related procurement; it is a component of the final product, such as raw materials. It can have an impact on supply chain management. 
• Indirect Procurement: This is procurement unrelated to manufacturing, such as routine office supplies and heavy equipment maintenance. 

The Purchase Order Procedures 

Where the purchase request finishes, the purchase order begins! The purchase order process begins with the establishment of the purchase order, followed by the manager’s approval to check for any last-minute adjustments.

In this procedure, the budget and quality are evaluated. The supplier then accepts the purchase order, and this document is resorted to if any of the parties have a dispute. Listed below are the stages of the buy order procedure: 

• Making a purchase order

The purchase order is transmitted to the vendor, who obtains the necessary information from the purchase order document. Additionally, it aids the vendor in preparing an invoice.

• Acceptance of vendors

After that, if the vendor has approved the purchase order, they will send a receipt to the customer. If a vendor wants to change a purchase order, the vendor will contact the customer first and confirm the receipt.

• Payment received and purchase order sent

When a vendor and a customer agree on a term, it is referred to as a binding contract. Then the vendor will send the purchase order. Both parties will keep the data.

• Agreement to pay

After the customer receives the product, the Good Received Note (GRN) will be sent to the vendor. After that, the last stage is the payment made to the vendor.

What is Purchase Order Management?

Purchase order management is the internal process of managing purchase orders within an organization. It ensures that only required purchases are made and no unnecessary ones. It increases employee productivity and ensures cost-effectiveness. Numerous organizations have well-designed and established departments for this function.

Also read: The Importance of Purchase Order (PO) in Business

How Does Purchase Order Management Software Help?

After discussing procurement, purchase order management, and purchase order procedures. It can be seen that Purchase Order Management Software can indeed have a positive impact on your business. Then below are five ways that purchase order management software can help your business activities.

• Real-time monitoring

Using purchase order management software, you may view the current status in real-time. This feature can help your business to streamline purchase orders. Apart from that, procurement management also monitors purchases and alerts Whenever an Update Occurs.

• Purchase order management

From Purchase Requisition Tracking to Purchasing Order Creation. This software has an automated form and saves employees time by eliminating the need to search for forms online. This software simplifies the procedure and keeps the key individuals informed. Each purchase order can be track by the manager.

• Invoice & bill management

Templates are offered in order to speed up the process. More importantly, it reduces the use of manual, error-prone paper methods. This software also monitors payments and billing in order to provide advance notice of the same.

• Vendor management

In addition, this software can also help you to integrate all information and documentation related to suppliers. This software allows you to analyze vendor performance based on product quality, service, price, lead time, and more.

• Data security

This cloud-based software, so you don’t have to worry about data security. What you need to know Data security is not your responsibility. Regardless of the sensitivity and classification of your data, it will be safe and stored encrypted.

Conclusion 

Procurement & purchase orders are still often ignored by employees, and less attention is paid to them. With this procurement software, you can help keep costs under control, eliminate manual processes from being automated, reduce purchasing risk, and other uses that can help your business become more efficient.

Therefore, companies need to use the best Procurement Software for their business. Procurement software from HashMicro can help you ensure efficient procurement costs, manage purchase requisitions in multiple branches, place orders with various suppliers, and get the best deals, All through a single system. You can first look at the pricing scheme to determine the estimated software procurement cost. Contact us for further information and get a free demo!