Table of Contents
Any business owner or freelancer must be aware that purchase orders are essential business documents. Purchase orders between the buyer and the supplier are binding legal contracts. They prevent you from unanticipated price increases and widespread procurement disputes while also requiring you to complete the order you are requesting.
As businesses expand, having a purchase order tracking solution in place to control and monitor purchase orders is crucial. The data on these forms is essential for connecting each step of the transaction and order fulfillment processes.
A purchase order tracking process is, therefore, necessary if you want complete control and transparency over these activities. This will allow you to monitor the progress of the purchase orders and guarantee the accuracy and effectiveness of the procurement processes.
Let’s now discuss purchase order monitoring in further detail for the success of your company.
What is Purchase Order Tracking?
With a well-maintained PO log, the procurement team can track purchase orders more efficiently. Because it is a legally binding document that directs them through the procurement process, the purchase order is a crucial document for modern companies.
The procurement process of following a purchase order from the start of the purchasing process until the last payments are made is referred to as purchase order tracking.
Simply put, it records the purchase order throughout its entire lifecycle to give the supply chain complete visibility. The main objective is to completely disclose all connected procurement procedures. This step in the procurement process is crucial.
Many purchase orders track the same products on different occasions in time, depending on the commodities in question and it covers both the buyer and the seller in the event of any issues connected to the transaction.
Manually tracking purchase orders leads to a lot of paperwork and misunderstandings during purchase order tracking. Modern purchase order tracking streamlines the process while also increasing business productivity to levels unheard of thirty years ago.
Purchase Order Lifecycle
An employee of the buyer company drafts a request for the goods or services required, which is then sent to internal team members for inspection, approval, or rejection. Any changes in the list of goods and services, budget, timeline, etc are noted here.
The required approvers give their approval and sign off on the purchase request. Depending on organizational policies, either a single approver or a group of people can perform this. Often, it depends on how much money was spent. The request might occasionally be handled through strategic sourcing to guarantee the best pricing if a preferred supplier is not already in place.
Purchase Order Issued
Following the acceptance of the created purchase order, the buyer issues a PO to the supplier, designating a specific PO number, and includes all necessary information, such as the estimated cost and the total number of units.
The supplier either accepts, rejects, or returns the purchase order (PO) after receiving it from the buyer for further discussion. Upon approval, the supplier will deliver the products and services and then send a bill for payment.
Purchase Order Recorded
The buyer may lawfully record the PO and keep it on file once the supplier has signed it.
How to Implement Purchase Order Tracking?
There is no longer a need for the time-consuming and difficult purchase order procedure. Businesses can effortlessly keep track of all aspects of purchasing and payment using automated technological solutions for purchase order tracking.
These purchase order monitoring systems increase accuracy and uniformity across the whole PO process while reducing the amount of manual accounting and paperwork needed.
With the help of efficient cloud software like Moon Invoice, businesses are no longer concerned about misplacing purchase orders or paying invoices with the wrong PO.
Businesses no longer need to sift through cluttered spreadsheets and email boxes to obtain information about purchase orders. Customers may easily discover the order date, vendor information, and even the initial purchase requests with only one click.
Why do Businesses Need to Track Purchase Orders?
Confirm the Status of the PO
Suppliers oftentimes fail to fulfill the order. Despite its rarity, this can and does occur. This could result in a shortage of crucial equipment, delaying the launch of the new medical center and causing a revenue loss than was anticipated.
To authenticate the receipt, acceptance, and confirmation of purchase orders, automating purchase order tracking system must be employed. If the issue is identified in time, it can be fixed by making a fresh order before the deadline is missed.
Know the Status of your Order
Purchase order tracking keeps you informed on the status of your orders as they are filled, shipped, and delivered. The inability to obtain orders can cause severe delays in inventory management.
Purchase order tracking notifies you whether your order has been sent, is in transit, or is on its way to your receiving department.
Keep Track of Multiple Delivery Dates
You need to keep track of multiple delivery dates if you frequently place orders from multiple vendors and get multiple shipments. This could significantly disrupt your regular workflow if you don’t have a committed, adequately staffed department for inventory management.
By informing you and your purchasing department when to anticipate the scheduled delivery, a purchase order tracking system for purchase orders can encourage more effective automated workflows.
Reassurance on Delivery Dates and Order Deadline
You might have to postpone launching your business, cancel appointments, or even turn away consumers because of unexpected delivery delays. Delivery dates may be impacted by lead periods and shipping options depending on the type of merchandise.
Multiple shipments from various manufacturers only make the issue worse. Using information from a purchase order tracking process for purchase orders, you may predict delivery schedules, giving you the assurance you need to start your new project on time.
Simplify Purchase Order Reporting
Overburden can readily result from numerous delivery deadlines, procurement orders, and hospital sites. Things can go between the gaps in this place because of everything.
You won’t need to keep track of several receipts or shipment confirmations if you use an effective purchase order tracking system, which may produce a weekly report detailing all the shipping activities for your sales.
Purchase Order Approval Workflow
Here’s how to get a purchase order approved, regardless of the method you use in your workplace:
When the procurement department or deligated employee makes a specific request for products or services, the purchase order process is triggered. The employee then creates a purchase order, describing the items required, the preferred vendor, their price, the date they are required, and the address where they are to be delivered.
You can begin the purchase order procedure when a worker or your department requests specific products or services. The employee must draught a buy request that specifies the goods from a certain supplier that are required, the pricing that was decided, the deadline for the goods, and the delivery location.
To speed up the approval team’s review of the request, you may also suggest to your employee to justify the purchase.
The original employee now sends the PO approvals representative the purchase request. It might be the management of the employee or a higher-ranking official. You proceed to the following stage of the procedure if the request is approved.
The individual eligible to approve buy orders will examine the purchase request depending on its scope and value. They must make sure that the budget is used responsibly if they want to guarantee operational performance. After being approved, the request is further converted into a formal purchase order.
Purchase Order Issuing
To expedite the procedure, the accepted purchase requisition is changed into a purchase order with a specific number and delivery information. The chosen vendor receives the purchase order, either physically or electronically.
Now, a formal purchase order with a unique purchase order tracking number is created in response to each valid purchase request. The authorized vendor is subsequently handed the PO.
Analyze Vendor Response
As soon as the vendor receives the purchase order from you, they will offer you the receipt and the approximate information required to deliver the goods. An official purchase order from you that the seller receives establishes a legally enforceable contract for the transaction to happen.
Normally, when the vendor receives a purchase order, they let you know and give you an estimated delivery date. After the merchant accepts your purchase order, a legally binding contract between the parties is now in effect.
Your personnel must examine the shipment to the packing slip to ensure that the received goods are not damaged, missing, or inconsistent with the planned purchase order. To guarantee that the goods are supplied following the purchase order, any anomalies should be reported right away to the vendor.
Process the Invoice
When the final check is written, the vendor sends an invoice to your accounts payable department. To manage the control spend and make sure transactional data matches, the purchasing department must perform a three-way check that includes records like the initial purchase order, the vendor’s invoice, and the receiving report or packing slip.
According to the terms that were earlier agreed upon by the parties, the accounts payable department gives the vendor the requested amount while writing the check. The supplier begins the billing process in line with the accepted purchase order.
The accounts payable department pays the vendor following the agreed-upon terms if everything is in order. If something seems odd, further discussions with the vendor are necessary.
Pros and Cons of Conventional Purchase Order Tracking Methods
The Pros of conventional purchase order tracking methods:
Low or No Training Necessary
The staff either requires no training at all or very little to use Microsoft Excel spreadsheets. With an excel purchase order tracking system, data can be retrieved quickly and simply.
Simple to Start
The usage of Excel spreadsheets and other manual purchase order monitoring methods is straightforward. For organizations managing a small volume of POs, data input and validation are simple tasks.
The Cons of conventional purchase order tracking methods:
Misplacement and Damage Incidents
The purchase order must be duplicated many times for manual processing. While being handled by the staff, these copies could easily be lost or harmed. It takes time and is prone to error to handle multiple copies, join them to the appropriate group of papers, and file them.
Inaccuracy and Erratic Implementation
Traditional purchase order tracking entails manual processes for data entry, validation, and PO approval. Everybody approaches work differently. As a result, the PO data is inconsistent and inaccurate.
Compliance and Transparency
Traditional purchase orders do not have a standardized tracking system. Human prejudice and errors are common in processes that are manually managed. Workflows for manual purchase order tracking display low compliance and suitability as a result.
When using manual purchase order tracking methods, the status of the purchase order is not displayed. Due to a lack of visibility, the procurement is unclear about what is causing the delays and process bottlenecks. The points above indicate that a manual purchase tracking system has more disadvantages than benefits.
Growing businesses need to adopt purchase tracking methods that are more efficient and can handle more purchase orders.
How to Find the Best Purchase Order Tracking Solution for your Business?
Only the staff of the business or organization that needs the purchase order tracking software may decide which is the best. The accounting division of a company is an example of how that solution frequently only makes up a small portion of a larger one.
Businesses no longer worry about misplacing purchase orders or paying invoices with the incorrect PO thanks to an effective buy order tracking tool like Moon Invoice.
Quick PO Creation
The first and foremost requirement a purchase order tracking software needs to fulfill for the efficient management of business functions is the creation of purchase orders. An efficient software creates POs by gathering data from related purchase requisitions and required business requirements. The details of the order are automatic updates and charted for in the purchase order templates.
Automated 3-Way Matching
An important benefit of automated purchase order tracking software is reduced errors and the computerized purchase order management software attains it by three-way matching of purchase requisition, purchase order, and the invoice of a particular project.
Cloud software updates all the modifications made on the orders and regularly updates a single dashboard so that purchasing department members can look at the reports in real-time. Real-time change consolidation is required by the software.
Effective PO Creation
Manual purchase order processes usually consume a huge amount of time, money, and paperwork, preventing purchasing teams from ever seeing the light of day. At best, there is a tenuous case for managing processes the old-fashioned way, with paper forms, emails, and spreadsheets. Because it provides effectiveness and precise homogeneity, the digital solution is much superior.
Using electronic purchase order tracking for procurement like Moon Invoice can completely change how you manage purchase orders. Additionally, it eliminates the need for paper-based operations, minimizes operational expenses across the procure-to-pay cycle, eliminates manual labor and human error, and ensures transparency. Additionally, it improves the accuracy and speed with which purchase orders are carried out.
Experience a Simplified Purchase Order Creation Process!
Transform the way you create and manage purchase orders for your business with Moon Invoice.
Purchase order tracking is vital for growing businesses that must maintain track of numerous purchase orders. Most of the time, procurement experts work on low-value jobs like data validation and approvals.
Their productive work hours are freed up for other crucial efforts thanks to automated purchase order tracking software and processing.
With the use of workflow automation tools like Moon Invoice, the procurement team’s capacity to speed up the processing of purchase orders is fairly good. An integrated automation platform called Moon Invoice has a lot of exceptional key features. You can track purchase orders without switching between multiple apps even on mobile devices through its intuitive interface.
If you have any more doubts floating in your mind, don’t forget to check out our FAQ section.
- Creation and approval
- Dispatch and goods delivery
- Three-way match
- Payment and closure