Businesses can’t run without guts and data, and those who don’t understand the data sadly fail. That’s futile. A predictive PO (purchase order) system can escalate your business to soaring heights. Purchase order management has become a key point for the majority of retail businesses and it isn’t just limited to manually creating the POs. Contemporary software bring versatility to the buyers and offer easy accessibility to the minute and crucial tasks.

Businesses can become prey to stocking issues such as an imbalance in inventory levels, lack of safety stocks, storage problems, inability to predict future stock, and much more! If you are new to the concept or someone who has just stepped into the e-commerce industry and planning to amp up your retail business, let’s break it down from scratch and understand.

What is a Purchase Order?

If you think of the term literally, it simply means an order to purchase a product. Basically, any purchase order can be called a legally binding document that is beneficial to both the supplier and the buyer. The buyer creates this document to receive service or provide products in the future. Any purchasing organization can benefit from this document in the longer run.

How Can You Benefit from a PO?

You must be wondering what could be the benefit here.

  • As a purchaser, you don’t need to pay in full while placing an order.
  • Simultaneously, the supplier need not be concerned about the financial risk because they have a legally binding document.
  • You can only pay the amount in full once you have delivered the requirements mentioned in the purchase order.

Now, suppose you have a retail business selling many products and it requires the daily creation of purchase orders.

Would it be feasible to manually track the inventory, understand the demand, gauge the products that are not selling and create purchase orders all on your own?

Your answer could be yes only if you call yourself a multi-tasker! It becomes extremely cumbersome to manage multiple things when you have huge amounts of sales to manage and all you want to do is focus on enhancing your business smoothly.

According to a recent study by APQC, manual purchase order processing can cost as much as $506.52 per PO, depending on the industry. An adequately established purchase order software can work wonders if you want seamless order creation and fulfillment. Order fulfillment is the key to block-free order delivery, which is why buyers need to understand and implement quickly in case of any missing product. It’s essential to maintain track of your expenses and earnings at all times – that’s what the business is all about! An excellent PO software will assist you in managing all supplier lead times, future commitments, efficiently replenishing stockpiles, and monitoring the entire ‘purchase order’ life-cycle, among other things.

Before you start jumping to conclusions, let’s understand what does an actual purchase order looks like. A PO is likely to include details including but not limited to the following:

  • Product or service
  • Specific brand name
  • Product quantity
  • Product price
  • Delivery date
  • Delivery location
  • The billing address

Purchase orders have a few basic steps that they undergo, such as:

  1. Invoice creation: The PO is forwarded to the vendor for reviewing each detail. It also helps the vendor to create an accurate invoice.
    Invoice creation
  2. Vendor approval: If the vendor approves the purchase order after reviewing, they will send an acknowledgement to the client. If they wish to make adjustments to the PO, they can speak with the client before acknowledging the change.
    Vendor approval
  3. Purchase recorded & PO dispatch: A binding contract is formed when the seller and the client agree on a term. The vendor will then send the purchase order out and both parties will record the data.
    Purchase recorded & PO dispatch
  4. Payment approval: When a product is received, the vendor receives a Good Received Note (GRN). Last but not least, the vendor gets paid.
    Payment approval

What Happens If You Don’t Opt for Purchase Orders?

Many businesses do not use purchase order systems in their operations because they believe it is a waste of money and time. Although this method is not professional, it can be useful for a startup or when you only have a few staff. Furthermore, managing POs can get trickier when the company grows and more people join.

You won’t be able to track essential information if there isn’t a proper record of the PO. If no purchase order tracking is done, employees can take advantage. This is why automated purchase order system software is essential to avoid fraud and theft and maintain track of the documents and transactions. A PO is necessary for business, especially if you use the pen and paper way of keeping track of it. This method will lead to an excess of papers, making it more challenging to handle, and tracking them will be difficult because papers can be easily misplaced.

It also has various advantages, such as the ability to review past purchase orders, order acknowledgement slips, and well-received notes, among others as it also comes in handy throughout the procurement process! “The procurement software application industry will generate an estimated 5.94 billion US dollars in total revenue in 2021,” according to Statista. The study also states that the market is expected to expand slowly but steadily in the future years, with an annual growth rate of 2.3 percent. This means that more and more businesses will opt for intelligent purchase order system software that shares their burden of mundane tasks and enhances their overall procurement process.

Features of an Ideal Purchase Order System Software

If you want the best purchase order software, it helps to consider the following:

  • Determine what your purchase system lacks
  • Decide which points can help you save time, money, and resources.

The requirements to create the perfect PO system software vary according to business needs and may not be generic. Here are some features that any purchase order system software would offer you:

1) Request & Quote:

Request & Quote

A PO initiates by requesting a suitable vendor or supplier and then receiving the perfect quote that suits your budget. Modern-day purchase order management should help you with minor yet key tasks such as:

  • Easily search the existing suppliers and the products or services they provide
  • Employees should be able to submit requests with or without information about the supplier
  • Buyers should be able to submit a quote request to suppliers
  • Buyers should be able to compare estimates and narrow down their choices of vendors
  • In case of selecting a preferred vendor, employees should be able to convert that quote into a purchase order

2) Spend/Authorization Approvals:

Spend- Authorization Approvals

It is equally important to keep the finance team informed about the purchases made to avoid any chaos in the later stages of the purchase management process. This is why a PO software should be compliant enough to have the following features:

  • The ability to route requisitions depending on the amount of the purchase
  • The system should be able to route requisitions to the relevant financial team with ease
  • It should support a flexible approval routing so that it is easier to route the Spend to appropriate authorities

3) Automatically Generated Purchase Orders

Automatically Generated Purchase Orders

There is nothing wrong with manual PO systems. However, would you be comfortable with spending hours updating it while there are leaps and bounds of work to cover?

Here is what you can expect from an ideal software:

  • The ability to automatically create the purchase orders to save time
  • A list of vendors that you already deal with
  • Number of units of order for clarity

4) Purchase Order Process:

Purchase Order Process

After the management has approved the request, you can choose one of the following methods:

  • Create the purchase order from the request automatically
  • Create the PO manually from the request

The first method is appropriate in situations where the desired vendor has already been determined and catalogues have been created. After the requisition is authorized, you can produce purchase orders automatically if you have catalogues in place and preferred pricing set up.

If you don’t have preferred suppliers or your buyers require a quote first, it’s usually best to go with the manual method. The buyer can turn a requisition into a PO once it has been accepted. They can make changes to the requisition before the document is sent to the supplier using this option.

5) PO Tracking:

Purchase Order Tracking

Any procurement management software should track open purchase orders. You can track its status throughout its lifecycle with purchase order tracking. The following are the essential steps in the PO lifecycle:

  • Acknowledgement of Order

The vendor recognizes the purchase order and verifies that they can meet the order’s requirements at this point. If an item may be back-ordered or obsolete, they can add this additional information because of the acknowledgement.

  • Place an Order for Delivery

You should be able to track both the delivery status and the advance shipment notification. The supplier sends out an advance shipment notification as soon as the product is sent. You can quickly track the progress of delivery after you obtain a tracking number in an ideal purchase order software. Moreover, you can automate the order tracking process using a perfect PO system so that it can track the delivery status automatically. When the status changes, you will receive an automated message informing you of the delivery status.

6) Contract Management

Contract Management

You may store and manage all vendor contracts with the contract management feature of your purchase order management software. It offers a wide range of options and features like the purchasing transaction, which might assist you in increasing compliance and spending with your selected vendors.

You’ll require the following features from a purchasing system standpoint:

  • The ability to store contracts, as well as contractual data, in the system
  • The ability to track contract spending by linking contracts to purchase orders
  • Direct users to contracted vendors to prevent cost overruns
  • The ability to track crucial renewal dates so you don’t have to pay for renewals you don’t want

7) Spend Dashboard

Spend Dashboard

The increased efficiency of the entire purchasing process is one of the advantages of automation with the help of purchase order software. As a result, the overall cycle time and cost of processing a PO are reduced. On the other hand, management and budget owners have total visibility into the purchase process because the data is in one location.

In addition to this, finance teams and budget owners should be able to quickly use a spend dashboard of the software to:

  • Recognize major spending patterns and cash flow visibility
  • Identify the company’s key vendors and partners with whom it spends money
  • Determine which departments are spending the most money and compare the details with the production
  • Connect chart of accounts to granular category level data, such as a thorough view of what is being purchased under a particular chart of accounts

8) Spend and Transaction Reporting

Spend and Transaction Reporting

The spend dashboard is ideal for providing visibility to management and presenting a summary of spending. However, your users may occasionally require detailed data for additional analysis or for integrating into their backend ERP system. The purchase order system’s reporting functionality should offer the following features:

  • The ability to report on purchasing transactions at the line item level, such as all purchases in the previous 12 months or all Purchase orders by vendors
  • The reports should be exportable to a spreadsheet for additional examination by the user
  • Reports should be customizable, making it easy to produce new ones and make changes to existing ones

How Can a PO System Software Benefit My Business?

There is no doubt that your business will see impactful growth with the help of a purchase order system because of its core functionalities that make the entire purchasing process swift and seamless. Here is why you need to invest in one such software:

  • Order Accuracy at its peak!

A purchase order is a formal offer to make a purchase to your supplier. The order becomes a legal document between you and the supplier if the supplier accepts it. There is no contract until the supplier accepts the order.

In the event of a dispute, POs give reliable evidence of what was ordered. When compared to a verbal order, the software lists the quantities, item descriptions, price, discounts, delivery date, and instructions, reducing the risk of error. Making sure the PO’s data is right will make paying the related invoice a lot easier.

  • Swifter purchase management system

It’s easier to observe how budgets are affected because the purchase order system software outlines expenses before a task begins. You can have the option of ordering a single project or numerous projects at once.

Apply the project reference to the order when ordering products or services for a project so that the goods on the order can be linked to the project. You can provide accurate quotations by automating the allocation of stock and costs to the project at every point of the purchase order life cycle. You must calculate actual purchase order amounts to determine costs before a project begins if you want your POs to be precise.

  • Streamlining stock becomes easy!

You can quickly monitor your financial investment in inventory with proper purchase order software in place for better inventory management. There will be a visual representation of current stock levels, reorder levels, stock on hold, and free stock. This provides you with a level of visibility and control that many organizations lack, resulting in stock shortages. Purchase order system software provides visibility into all of these areas, as well as costs and the sales process, allowing you to view the profit margins on each of your products more clearly.

  • Finding just the right suppliers

Do you know who your top vendors are? Do you know where you get the majority of your products? Do you know how much you’ve paid for previous products and whether you should be getting discounts based on your contract or your buy volume?

Many companies fail to address these questions, and as a result, they are doing themselves a disservice. Your purchase order system will help you see which providers are taking care of the majority of your demands more swiftly and easily. You’ll also be able to figure out whether suppliers aren’t keeping their half of the agreement — for example, by tracking late delivery and out-of-stock items.

This information allows you to assess whether it’s time to switch a vendor or negotiate better payment arrangements with some of your suppliers.

  • Of course, you can save time & money!

When suppliers share invoices with your PO number on them, staff don’t have to waste time double-checking that the bill is authentic. When the supplier accepts the PO, it becomes a contract, which eliminates any potential for disagreement.

Because of the PO process, the invoice should be placed into your accounting system with reference to the original PO, documenting delivery and modifying stock levels as soon as possible. Faster payment times save money on invoice processing costs because it takes less time to process them, which allows your staff to focus on other duties.

Trust the Experts to Deliver the Best PO Management System

e-SellerHub provides a world-class purchase order management system software that may significantly improve your procurement processes. Your team may spend less time on the administrative load of purchase order administration and more time on value-adding duties because the system streamlines and automates the main procedures for you. The system’s built-in processes can be fine-tuned to your organization’s existing procedures, resulting in increased speed and accuracy.

Call us at +1 408 600 0534 or drop an email at to understand how our purchase order management system can automate your procedures and help your organization prosper.

Find out how ESellerHub can help your business grow

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