You may be wondering, what on earth is a purchase order? At times, things can be a little more complex than they sound. If you’ve had some exposure to B2B marketing, chances are that you’ve heard of purchase order systems, which incorporate softwares designed to carry out purchase order processes, from managing the necessary supporting paperwork to ensuring the order is swiftly delivered.
A purchase order hence represents the official document detailing the offer made by buyer to seller, including information such as:
A purchase order is a confirmed, commercial purchase slip generated on the buyer’s side and issued to the vendor/supplier/seller for several purposes. It is intended to:
a) simplify the buying process, such as managing inventory, expenses and budgeting,
b) prevent repeat orders, as well as
c) serve as a receipt, i.e. a documented proof of purchase in the case of any transactional hiccups.
Purchase orders also contain a unique reference number which matches its invoice (produced by the seller) to ensure all goods received are in line with what was originally requested, and that the buyer is charged the correct amount stipulated in the order. Overall, producing purchase orders is a good business practice to develop.
But why bother establishing an intricate purchase order system when you can produce all your POs manually on say, Google Docs or Microsoft Word?
Having an automated purchase order system will help in your accounting process, allowing you to keep a record of all your PO reference numbers stored in your database and match them to their respective invoices. Executing tasks manually can also result in a higher degree of human error, such as creating duplicate orders or filling incorrect information.
With a purchase order system in place, the buying process will flow a lot more seamlessly. First and foremost, establishing such a system is an indication of financial commitment to keeping stock of inventory. You’ll also be able to save on time needed for employees to manually generate POs. Moreover, you can assign permission levels to different members, from allowing employees to submit numerous purchase requests, to enabling managerial access to oversee such requests.
In an earlier post, we talked about purchase orders, its process and how to automate PO workflows. Now that the pandemic is digitising nearly every business process, it helps to learn a bit more about how to carry your purchase order system out online. In 4 simple steps, we’ll show you how to streamline your PO system from start to end!
After identifying resource needs (e.g. product type, quantities, sum) and performing budget and inventory checks, the employee can proceed to submit the purchase request for approval. During this period of review, the department head will perform the final round of verifications to confirm the justification for this purchase, as well as ensure sufficient funding.
Once the purchase request has been granted approval, it’s time to generate the purchase order. Use Forma’s purchase order template to create the digital form, and then make further customisations from there. The platform also enables the option for a digital signature for authorised personnel.
Upon preparing the PO, the next step would be to build a good workflow. Refer to the section under “How to automate a Purchase Order process?” in this article for a walkthrough on designing a PO workflow with Forma.
From there, assign permissions to your procurement team, who will go about the process of liaising with the vendor, mutually agreeing on the transaction, tracking and receiving the product, making payment, and finally authorising the invoice.
The last step in your purchase order system would be to store away a record of the PO in Forma’s database for future auditing purposes. Recently, we got integrated with Zapier, meaning you can now set triggers/Zaps every time you create a new database record, to notify team members via Slack about the latest updates.
As demonstrated in the images above, keep an easy track of purchase orders on Forma’s drag-and-drop, no code automation platform. Build your own purchase order form (and many other form types) based on our variety of customisable templates. Afterwards, go on to design your workflow and assign teams/permissions accordingly to relevant personnel.
You can also generate PDFs of your finalised purchase order. Collect digital signatures, make online payments where necessary, and connect the system to your personal database!
Try it out now for free.