Matching purchase orders to invoices and goods receipts can take up a lot of time. A purchase order with hundreds of lines and several pages has to be manually matched to an invoice that may be just as detailed, along with a goods receipt if there is one.
PO management software for indirect spending should be able to match POs to invoices automatically. Some vendors do promote PO matching in their system but often the user is just comparing the PO and the invoice on different screens – which is still a manual process!
So given all the work that has to be done to control indirect spending and automate the process, it’s a good idea to look for a solution that can do both.
What is the PO approval process?
Once a purchase requisition is created for a certain purchase, the finance department approves the spend and creates a purchase order. The purchase order is sent to a supplier to fulfill as per the quantities and costs dictated in the document. Once the goods and services are received, accounts payable examines the purchase order, the invoice received from the supplier, and the goods receipt. If everything matches the invoice is ready for payment.
If there is an exception, as when items on the invoice are not matching terms on the purchase order, the invoice is sent to the approver to reconcile. Once the issue has been cleared up the invoice can be sent to the organization’s ERP for recording and payment.
Palette AP automation has a PO approval module that allows you to digitally create and submit purchase orders, track them, and pay all your invoices from one centralized location. This makes it easier to see who’s spending what and where, and how well your company is sticking to your budget.
PO system software like Palette has a matching engine that compares the purchase order to the invoice, and passes the invoice to the ERP if there is a match. To understand the process of how it works, you start with invoice data capture.
Invoice data capture software extracts the invoice data and makes it available in a central dashboard. The invoice is matched to the PO in the background, and happens within minutes of receipt. This is called “touchless” because finance administrators do not have to handle the invoice or manually process it.
If there is no match the invoice is flagged and it is sent, along with the PO and any other information like the goods receipt, in a workflow to the approver for reconciliation.
“Touchless invoice” means that the invoice is received electronically and automatically matched against an order or contract. If the invoice meets all regulatory requirements, it is automatically sent on for payment. With AP automation like Palette, this process just takes a few minutes – saving the organization processing costs and the time lost managing the purchasing and matching process manually.
Benefits of using a PO management software
- Control indirect spending in the organization
- Have a complete requisitioning system that gives finance control
- Automatically match POs to invoices and goods receipts
- Have an automated approval workflow that reduces approval cycle times
Palette AP automation has both an automated requisitioning system and PO matching capability. That means you can get all the functionality and automation needed to control maverick spending and have a workflow that reduces repetitive manual work.
For more information on Palette requisitioning and PO matching, visit our PO Workflow page