The involving in all aspects of business operations of Chief Financial Officer (CFO) leads to make use of purchase order software. This software allows the CFO to more efficiently manage and control purchases. They can also ensures employee and vendor compliance across the entire procure-to-pay process. In the end, procurement will have more time for strategic buying and enabling managers to make smart decisions with purchase order best practices.
In this article, we will introduce effective strategies to control on ecommerce store.
Put Employees in Control with Self-Service Purchase Order Management
Investing in purchase order software for employee self-service makes it easier for employees who work outside procurement to create and submit purchase requisitions for approval. This allows procurement staff to spend less time approving and processing orders and more time locating and vetting suppliers, then negotiating better terms with them.
With the appropriate approval workflows and spending thresholds in place, you can allow department managers to approve lower value purchases. This empowers your department managers to make smart decisions while freeing up time for the procurement team. Decentralizing your purchasing allows managers and employees to get what they need when they need it, boosting overall morale.
Require Purchase Requisitions for All Orders
Chances are if you’ve been using a manual purchase order process for a while, there are a number of purchases happening without first using a purchase requisition and approval process.
Purchase order management software allows you to create and enforce a set of business rules for purchasing. All purchases must begin with a purchase requisition, which is then sent through an automated approval process. Only once the appropriate staff members have approved the requisition does it become an official purchase order that’s sent to the vendor for fulfillment.
The automated workflow eliminates the need for rekeying data, reducing error risk, and ensures no purchases are approved without the necessary purchase requisition. This makes it easier to keep all departments on budget to keep your bottom line where you expect it to be.
Focus on a Tight Automated Approval Process
While it will take a bit of time to set up the approval process and workflows based on spending thresholds in accordance with your purchasing process, it is well worth it.
All purchases under $100 from Amazon.com, such as office supplies, are cleared to be self-approved, as long as the amount remains free in the department’s budget.
Any purchase from other vendors, between $100-$1,000 must be approved by the department manager.
Any purchase in excess of $1,000 must be approved by the department manager, as well as his or her direct supervisor.
And so on.
All that matters is that you set the controls as they should be applied to your business structure and aligned with company policy.
The automated approval process means the purchase requisition is automatically forwarded to the appropriate person for approval before it moves to the next step. Approval is as simple as logging in and clicking a button.
This ensures large purchase must be approved by multiple people before it becomes an official purchase order. Each person in the chain will have also need to have the appropriate user permissions, and access to the department budget information. If a department manager hits a certain spending threshold within a month, approvals can be routed above them to ensure spending remains under control.
Provide Each Department with a Budget
Decentralizing your purchasing doesn’t mean you’re giving up control over purchasing. You’ll still have control over whether a purchase is in line with the company budget. Purchase order software allows employees and department managers to view the current budget and availability of funds when they enter or approve a purchase requisition. If a requisitioned item exceeds the budget, the software automatically triggers the over budget approval routing, so that it can be approved if it is required for continued business operations. Once the appropriate staff member receives the notification about the over-budget item, the manager can either approve or reject it, ensuring everyone maintains they budget and curbs rogue spending.
Monitor Blanket Purchase Order and Vendor Contracts
With the right purchase order software, you’ll also have a contract management system that allows you to track your purchase requisitions against contracts, track contract expiration dates, and more. This allows you to make sure purchases are happening in compliance with the contract’s terms, so you’re capturing all the discounts you’re entitled to.
Purchasing and Approval Visibility
Proper purchase order control keeps the transaction amount, budget availability, and approval process transparent. This transparency ensures you’ll be able to maintain internal spending controls while adhering to any external auditing requirements.
Procurement software also helps you to fulfill both internal and external compliance requirements since it provides contract approval dates and attached documents, such as your service level agreements, pricing sheets, and more. The quick and easy access to this information helps you ensure timely contract completion. If the legal department hasn’t yet approved a contract, you can approach legal directly, instead of wasting time to track down the document.
Your purchasing system will provide real-time visibility into what’s happening throughout the company. You’ll be able to view reports and inventory records from any department at any given time. And, with the audit trail, there is a record of who takes what action and when so that all employees can be held accountable.
To sum up with purchase order
With proper visibility into the information you need for effective contract and purchasing management, your CFO can do the job more effectively without having as many hands involved. Your accounts payable department will be able to be to pay bills faster, giving you leverage to negotiate better payment terms and capture early payment discounts in the future.