Purchase Order Automation

Generate purchase orders and import external purchase orders. Boost the efficiency in your purchasing processes and increase cost awareness in your organization with our solution for purchase order automation.

What is a purchase order?

A purchase order is a document issued by a buyer to a seller which includes the first official offer regarding types, quantities, and agreed prices for products or services. The process for a purchase order is usually both long and complex which requires a lot of back-and-forth communication between the buyer and seller, such as renegotiating or other changes to the order. Due to the nature of this type of disorganized communication, information tends to get lost. Even when everything is in order, due to the large amount of information, it can be still difficult to keep track of everything.

In comes purchase order automation.

“Before the deployment of Palette’s solution, invoices received as PDF files had to be printed, approved, and coded before being passed to our Accounts Payable department for manual filing – all of which was extremely time-consuming and labor-intensive.”

Jeff MacPherson, Financial Analyst • Canadian North Airlines

What is purchase order automation?

Purchase order automation refers to the process of using electronic tools, systems and software to digitize and streamline the entire purchase order process. Instead of having to rely on manual processes prone to human error, you rely on a solid purchase order software system that automates each and every step.

How does purchase order automation work?

Using a purchase order management system, all invoices are automatically matched against the corresponding (internal or external) PO at the header or line level according to predefined business rules and tolerances. Any invoices matching within approved tolerances can be sent directly to the ERP for recording. If any information is missing or incorrect, it can be sent to the proper approver to be corrected and matched manually.

One invoice can contain items from multiple purchase orders, and one purchase order can be matched to multiple invoices, whether they have been delivered in part or in full:

  • Match at the header or line level
  • Match internal or external purchase orders with hundreds of lines
  • Exceptions are sent to approvers to validate with one-click approval on mobile or desktop
  • Provides a complete audit trail, including messages

Benefits of an automated purchase order system

With the reporting features of purchase order solutions, you gain an improved visibility into each department’s spend. You’ll get easier access to see what they are spending on, and who they are spending it with. Purchase order solutions allow you to secure better deals with your suppliers or alert you when you should consider alternative suppliers to work with. You get a better understanding and visibility of your entire supply chain and supplier performance. Within the purchase order management system you can also search through all documents in the system, giving you access to all pending orders, view the status of an order, invoices and payments.

Purchase order management system allows for a variation of different functionalities including:

  • Who’ll be able set up business rules dictating who has the ability to request products and services for different departments
  • Who’s got the authority to approve requisitions and convert them into purchase orders
  • Who has the ability to see and process invoices
  • Who has the ability to make budget adjustments

Manual tasks are prone to human error. Handwriting may be illegible and misinterpreted, or fields may be unintentionally left blank. Simpler mistakes need to be tracked down and addressed which can cause long, unnecessary delays in the purchase order process. Automated purchase orders assures everything is legible and removes the chance of missing details.

Purchase order management systems allows you to create rules and permissions on a fundamental level to restrict purchasing to certain thresholds, suppliers or items. Create blanket POs and route them automatically for approval, and more. This means that no matter what your needs and prerequisites are, the system can be configured to address them.

With all your vendors gathered in one centralized location in a purchase order management system, users won’t have to spend time digging for the required information. The requisition can be put together, click and sent to the approval person in a fraction of the time compared to manual purchase order management. The approval person can then review the requisition and immediately sign off on it so it becomes an electronic PO, or deny it and include a comment on how it can be amended. The PO is then sent to the vendor.

This purchase automation takes place in real time. Compare it to traditional paper forms where the order needs to be faxed, mailed or scanned to create a digital form before forwarding it to the supplier – there’s a lot of time to be saved. It’s also easier to find the record of all actions taken due to the audit trail, so no more time lost trying to track down missing orders or documents.

Control indirect spend and reduce maverick purchases with Palette

Purchase orders generated by Palette’s automated purchase solutions are automatically delivered to vendors after they have been approved. Both internal purchase orders generated by Palette and external purchase orders are located in one place—taking advantage of reporting and PO matching.

Track with budgets and reports

Users can select from a long list of search criteria that can be used to generate custom reports. Tracking supplier performance, commodity purchases, matching statistics, vendor spend, etc. can all be facilitated in the reporting system. All reports provide a summary result set that can be drilled into to see specific details and actual images:

  • Employees purchase goods and services within a set budget
  • Purchases can be limited to preferred and properly approved suppliers
  • Generate better information for price and contract negotiations

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