We’ve all been there. You get a requisition approved and raise a Purchase Order (PO) for a new laptop, office equipment, or something to help you work from home, but as the days go on, the PO goes unintentionally ignored as it slips through the net of the hundreds of other requests and invoices the business has to pay. As a result, the workflow moves slower, productivity falls and company employees eventually become unhappy at not being able to get the tools they need to do their job.
This is a situation that’s unfortunately far too common within businesses today. Although innovations such as automation in finance are able to fix problems just like this, many businesses haven’t yet gotten around to adopting solutions that can not just help staff tackle them but eliminate them. Just 15% of UK finance leaders surveyed said they were using automated invoice processing, yet of those businesses that are using automation in the finance function, 34% said it had removed around half of their manual processes, 38% removed in the majority of situations, and 7% had completely removed them.
With businesses having to manage hundreds, sometimes thousands of invoices, purchase orders, and receipts every month - and with the average invoice approval process period for UK businesses standing at around 18 hours - there’s no time to lose in the search for new efficiencies in the finance department.
Sent from the intended buyer, a purchase order is a finance document sent to a vendor to confirm a purchase of goods or services for a specified amount and value. Once the PO is approved within the business by HR, finance, or a line manager, it acts as an agreement between the business and the vendor that the sale can take place. Although it might seem simplistic, one seemingly insignificant document can go a huge way in helping to clarify any later confusion. For example, if a colleague had a PO request turned down but purchased the goods anyway without receiving management approval, or if the goods received weren’t for the same amount as stated in the initial purchasing agreement.
Available as an add-on feature in financial and ERP platforms, purchase approval software significantly improves the accuracy of and reduces the time taken to track purchase orders. Utilising the software also makes the process of raising POs much easier and more efficient, as staff can ditch paper documents and needless emails. It can also provide regular updates to the staff that raised the purchase order, such as the status of approval or if any further information is required.
With manual processes, the task of creating a purchase order typically takes a long time, is overly complicated, and creates a lot of frustration for both the staff that raise the POs and the accounts payable team that has to process them. The standard process relies on a lot of constant communication between the buyer, seller, and accounting department - usually through emails, phone calls, via or logging data into Excel spreadsheets - and as such can lead to miscommunication, lost information, and even duplicate or late payments.
With purchase approval software, businesses can automate the purchase order process either in its entirety or certain parts of it. For example, instead of employees creating a PO within a Word document, email, or other formats, purchase approval software digitizes the process to help keep a consistent system of record. Once the PO request is submitted, finance leaders can track the status of them in real-time or search for historic records in case of any issues with the vendor or supplier. As the process is centralised in one system, you can also provide quick and accurate reporting as well as for auditing purposes.
With an automated purchase approval process, you can rest easy knowing that you have a financial system that is able to provide a secure, accurate and real-time record of POs and their related outcome. What’s more, accounts payable staff are kept happy knowing that they can spend less time trying to find purchase orders and fixing issues and more time on tasks that drive better business results.
As we’ve discussed, there are several benefits to implementing purchase approval software in your finance department, but there are also specific benefits that we haven’t covered, such as:
Controlled cash flow: Gaining a more accurate view of money coming out of the business through purchase orders means you can ensure that the cash flow of the business remains healthy. Better decisions are made based on data, while forecasting can help predict any peaks or troughs due to seasonal changes or business growth.
Greater visibility: With purchase order requests and status updates all within one platform, you can gain a 360-degree view of the entire process as well as view specific POs if and when needed. The system is also updated in real-time as purchase orders are received, which means financial reporting can be presented whenever it needs to be.
Fully compliant: The real-time power of automated purchase approval software means reports can be pulled and presented as soon as possible, and not just every month or quarter. This is especially handy for auditing purposes, where requests for financial documents can come out of the blue and need to be supplied within a certain timeframe.
Improved efficiency: Equipped with purchase approval software, not only can you take away a lot of the time, hassle, and frustration of staff raising POs, but you can also reduce the time your accounts payable team have to spend reviewing, managing, and approving requests. Plus, vendors and supplier relationships are kept happier knowing they will get paid on time and without any risk of error.
Better negotiating power: By facilitating better, long-lasting relationships with suppliers and vendors, you can gain a reputation as a business that always pays on time without any fuss. Also, by gaining insight into regular payments and trending data, you can make better purchasing decisions, such as cost-saving subscription services or negotiating different procurement deals.
Drive business growth: Ultimately, with purchase approval software ensuring payments are made on time and for the right amount, you can help drive growth in other areas of the business. For example, accounts payable staff can focus on relationship building and client support rather than spreadsheet building, while finance leaders can pinpoint areas of over-expenditure and come up with ways to reduce unnecessary spend and improve cash flow.
So if you're one of the business that hasn't gotten around to using purchase invoice approval software, what are you waiting for? With Automated Invoice Processing solutions readily available, now is the perfect time to streamline your accounts payable processes and unlock greater efficiency and accuracy in your financial operations.