It is a battle any financial worker will understand – knowing where a Purchase Order is within the Purchase Order Process (POP) and validating all elements required are completed has been giving financial workers a headache for many years. Invu recently commissioned some research into the area of POP, asking 200 financial workers in SMEs located in the UK what challenges they faced.
What was clear is that the core data of the POP doesn’t have a smooth journey. With some companies having several employees involved in just one Purchase Order, it leads to a fragmented approach and makes management from the core financial team difficult. In the survey, a quarter of respondents said that purchasing was carried out by staff with other responsibilities.
With employees, budget holders, purchase managers and every step up to the CFO being involved, plus eight or more steps involved from requisition to reporting, it is important for companies to detangle the Purchase Order from internal processes. A quarter of respondents said that Purchase Orders can be raised without a nominal ledger code, therefore without employees knowing the financial impact on the accounts of the business, this can add to the strain of the already complex task of budget management.
If that wasn’t enough, tracking the format of raising a Purchase Order can be a headache within itself. With many companies taking a blended approach, a hybrid of online and paper-based, it can be difficult to track the POP data required. For example, in the survey over a third (36%) of respondents said that they still raise Purchase Orders manually with 76% admitting they use Microsoft Office or a separate purchasing system. This indicates a high risk of loss of purchase orders and a lengthy approval process. In addition, one third (33%) said that Purchase Orders are still printed and sent by post to their organisation’s suppliers – giving question to the effective use of time and resources.
So after all that doom and gloom, with the evil PO causing havoc for finance departments across the world, what can a company do to help improve the process? The answer is simple, data. Ensuring that you have clear sight of all the data throughout the eight (or more) steps in a POP is important. The clearer and smoother the process, the easier and more manageable the process will become. Putting a system in place that is user-friendly, intuitive and simple will enable the onboarding process for full employee deployment. Having a more effective, intuitive implementation process is likely to be met more positively if it isn’t seen as a laborious task, increasing engagement levels. Having one-touch approval options for the relevant team members required for sign-off helps speed up what can sometimes be challenging internal processes. Finally, by having all the information required in one central, easy-to-access place will make the evil Purchase Order a thing of the past.