Purchase order software allows businesses to create and send purchase orders and receive invoices electronically from suppliers. The software eliminates the need for manual data entry on either side of the process. It also reduces errors by ensuring that the correct items are ordered in the right quantities at the right time.
Choosing the best purchasing software that's right for your business is essential in meeting your company's needs. Purchase orders are not only used to request goods and services from vendors but also track vendor performance and set up payment terms, manage inventory, and create the foundation for your accounting department.
The right PO software will help you stay organized and streamlined.
In this post, we’ll go through the key considerations you need to put in, when choosing the best purchase order software for your company.
Know what to look for in a Purchase Order Software
Get clear on what your needs are before you start shopping. What problems are you looking to solve? What do you need from a purchase order system? One crucial distinction to understand as you evaluate these systems is the difference between purchase requisition vs purchase order. Recognizing the significance of this distinction is paramount.
A purchase requisition is an internal document that signals a need or request within an organization, often seeking approval to make a purchase. On the other hand, a purchase order is a formal document sent to vendors, confirming the specifics of the purchase. The software you choose should ideally cater to both these aspects, streamlining and distinguishing between these two processes efficiently.
These considerations will point you to the most suitable provider, who will offer you a wholesome solution to your needs. That said, there are essential features a software should contain to suffice running operations in your business effectively. Let's look at these features and why they should matter to you as you opt for a purchasing order software provider.
Inventory Management
A good software should help you manage your inventory better. With the inventory management feature, you get a complete picture of stock items, and it helps you plan for procurement without any last-minute hassle.
The complete picture is essential in avoiding embarrassing scenarios where you promise delivery of something you don't have in stock. You can track everything from raw material to finished goods easily.
Data Analysis
The software you opt for needs to provide analytic reports based on which you can get insights into how your business is performing. This feature shows what your business is likely to achieve in the future based on historical data.
Vendor Management
This is where you will store all the details about each of your vendors — names, addresses, contact information, and payment terms. With all this information in one central location, it's easy for everyone to find what they need instead of sharing files through email or throwing piles of paperwork around the office.
You'll also be able to easily find vendors who offer specific products at competitive prices by searching through their catalogs.
Purchase order status tracking
The PO software with a purchase order (PO) tracking feature, including managing the PO number, integrates with accounting systems. When a shipment has been made (or invoice paid), the order status is updated automatically in your accounting software.
Once you send out POs, you must know their status. Is the PO still open? Has it been approved? Has it been shipped? With this feature, you will also track each step in the purchase order (PO) process in real-time so that nothing falls through the cracks.
For example, if you have an order awaiting approval, you can quickly know who the approver is and why it is not yet approved.
Issue automatic purchase Orders
This feature is the most crucial feature for any Purchase Order software. The primary task of the software is to create and issue purchase orders.
The software should send out purchase orders in just a few clicks and all the necessary details like item details and shipping.
In addition, this feature also provides terms & conditions of the order, including payment terms, delivery dates, and discounts offered.
Approve & Reject Orders
Approval is an essential part of the purchase order cycle, and it should be straightforward for the approvers to approve or reject an order without hassle. Businesses approve and reject orders by sending emails or through SMS notifications. Iit should be possible to do bulk approvals, saving time.
Managing approvals and requisitions.
Purchase order management software often includes a workflow tool that automates the approval process. The software functions such that designated managers are notified when an employee creates a PO and the appropriate approvals are automatically sent to the finance department or other decision-makers.
You can also set limits on how much employees can spend without approval, preventing unwanted spending.
Blanket Purchase Order
A blanket purchase order is an agreement that authorizes repeated purchases of products or services from a vendor. It allows buyers to pay for multiple products or services and does not require a new purchase order for each transaction.
The blanket purchase order feature allows businesses to set up an authorization for multiple purchases within certain conditions. Blanket purchase orders authorize a supplier to provide the goods or services listed in the document over a specified period or until certain spending limits are reached.
This feature can be used instead of creating multiple one-time purchase orders, which would require more administrative effort.
Matching Purchase Orders with Invoices
Purchase order software with this feature compares the original purchase order to the invoice from the supplier and checks for discrepancies. They facilitate faster processing of invoices, reduce errors, facilitate quicker payment cycles and help identify any potential fraud issues.
Some purchase order solutions can even eliminate paper entirely, by capturing invoice data electronically, and automatically matching it to the appropriate purchase order in an accounting system.
Here are other essential factors you should look into before settling for a given provider:
Flexibility in Choosing Plans
On top of the functional features, you should look out for the provider’s operational models, to only settle with the one well aligned with the business’ capacities.
Beware of companies that offer only one type of plan, as this may not suit your business needs. See to it that the software package provides flexible plans designed to cater to the specific needs of your business. Whether you want to pay per month or per transaction, you should have the freedom to choose what is best for you.
Talk to other businesses about their purchase order software
If there's another business with a sound system in your industry, ask them which software they use and why they like it. Word of mouth is still a great way to find reasonable software solutions.
Check out online review sites.
Capterra is one the best places to look for reviews and comparisons of different types of software. You can also check out G2 Crowd and Software Advice. You'll get honest feedback from users of the various products to make an informed decision.
Benefits of Purchase Order Software
Think of purchase order software as a way to automate and streamline the entire PO process. It eliminates manual tasks.
Here are some of the benefits that a good purchase order software can bring to your business:
Faster processing of purchase orders
One of the things that a purchase order software does best is the fast processing of POs. You don’t need to manually fill out forms or type up emails anymore when you have a system. This makes processing faster and more efficient, especially if you have a lot of orders coming in every day. The time and money that you save from this can be better spent on other areas in the business that need your attention.
Minimal errors
Manually filling out forms, typing emails, and entering information into spreadsheets are prone to errors. One wrong detail could mean inaccurate records and incorrect data, leading to miscommunication between you and your customers. But with dependable purchase order software, there are no more manually filled out forms, which means fewer errors in the process.
Centralized system
With a purchase order software, everything is stored in one centralized system, which means access to all data anytime you need it (and anywhere you are). The enhanced data access eliminates excessive consultations across the business, smoothening operations further.
Boosts efficiency
A purchase order software means that you can process, manage, and track many purchase orders. It makes the whole system of generating purchase orders fast and simple. It thus does away with the staff time spent on manual handling of these tasks.
Implementing the selected software.
Once you’ve settled for a particular provider, it's time to roll it out into your organization. Be careful. The rate of technology implementation is devastatingly low, and you don't want to fall off in the middle of the automation process. It's only practical to finish what you start and reap its rewards.
For an easier transition from your manual routine to the newly adopted automation software, define your current systems adequately and train your staff.
Standardize your current processes
Standardized processes are essential for any successful business. If you don’t have standardized processes, your employees will be confused about how to do their jobs, causing them to spend more time on tasks than they should need to.
Purchase order software is only as good as the processes you have in place; therefore, it’s important that you first standardize your purchasing processes before implementing a new system.
Purchase orders should be made to vendors after being approved by the relevant team in charge. This means that purchase orders should be reviewed and approved before they are sent out to vendors. The procurement team is often the one most suited for this task, but it needs to be determined beforehand who will do the approval.
It's essential to create a framework for receiving and approving purchase orders so that the process is as smooth as possible. This will ensure that all of your employees know exactly what to do when they have a request or need something ordered.
Train your staff
Once you’ve established transparent standardized processes, it’s time to train your staff to use the new software. Depending on the type of program you choose, training may be required for every employee using the system or just those in purchasing and accounting roles. Your training program should include:
- A presentation of the system, including how to access it and how it works overall
- A demonstration of how the system works with each purchasing process
- A live test run of the system after employees have been trained
Benefits of Purchase Orders Template in Streamlining Procurement
Harnessing the efficiency of purchase orders templates is akin to setting a foundational pillar for your hardware startup's procurement processes. A well-structured template provides a standardized format and ensures consistency in capturing vital order details. With the dynamism that hardware startups usually display, any tool that fosters streamlined, repeatable, and error-free operations is invaluable. When embedded within an automated purchase order system, such templates become the bedrock for speed, accuracy, and scalability. While automation is the engine driving the procurement car, the purchase orders template is the blueprint, ensuring the vehicle is built to perfection.
Conclusion
POs are an essential part of managing the cash flow within your business. With an efficient purchase order system in place, you are better equipped to handle the cash flow within your business. It will allow you to make timely payments against purchases which are crucial for maintaining a good credit score.
The one you choose should be simple to use, but have enough features to handle all of your needs without driving up your costs unnecessarily. Once you find the right purchase order system, implementing it will be much easier. Quality purchase order software can be the foundation of your business finances, so make sure to choose wisely.
Frequently Asked Questions
What is purchase order software?
Purchase order software is a powerful tool that automates and streamlines the process of creating, sending, and managing purchase orders. It helps businesses track inventory, analyze data, manage vendors, issue automatic purchase orders, and more.
What should I look for in purchase order software?
When choosing purchase order software, look for features like inventory management, data analysis capabilities, vendor management tools, real-time tracking of purchase orders, and the ability to issue automatic purchase orders. These features will enhance efficiency and streamline your operations.
How can purchase order software benefit my business?
Purchase order software offers numerous benefits, including faster processing, reduced errors, centralized data management, increased efficiency, improved cash flow, and better supplier relationships. It eliminates manual tasks, enhances accuracy, and allows you to focus on growing your business.
How can I find the right purchase order software for my business?
To find the right purchase order software, reach out to other businesses in your industry for recommendations and learn from their experiences. You can also explore online review sites like Capterra, G2 Crowd, and Software Advice to read honest feedback from users. This research will help you make an informed decision.
How do I implement purchase order software effectively?
To implement purchase order software effectively, start by defining your current systems and processes. Standardize your workflows, train your staff on the new software, and ensure proper integration with your existing systems. It's a journey that requires planning and collaboration, but the benefits are well worth it.
What are the key features to look for in purchase order software?
Some key features to look for in purchase order software include inventory management, data analysis capabilities, vendor management tools, real-time tracking of purchase orders, the ability to issue automatic purchase orders, bulk approvals, requisition management, and matching purchase orders with invoices. These features will enhance efficiency and streamline your operations.
Can purchase order software help improve cash flow?
Yes, purchase order software can help improve cash flow by automating processes, minimizing errors, and streamlining the entire purchase order process. With faster processing and more accurate tracking, you can ensure timely payments and better manage your cash flow.
Is purchase order software suitable for all businesses?
Purchase order software is beneficial for businesses of all sizes, especially those that frequently deal with purchase orders, inventory management, and vendor relationships. It helps businesses streamline their operations, save time, reduce errors, and improve overall efficiency.
How does purchase order software contribute to efficiency?
Purchase order software contributes to efficiency by automating manual tasks, reducing errors, providing real-time tracking, centralizing data, and offering features like automatic purchase order issuance. By eliminating time-consuming and error-prone manual processes, businesses can operate more efficiently and focus on growth.
