Topics: Accounts Payable Automation

10 Reasons Why Your Business Needs a Purchase Order Management System

Posted on December 06, 2021
Written By Rukmani Krishna


Purchase order (PO) management is a critical part of the accounts payable function. Whether they’re coming from customers, being sent to vendors, or being used for intercompany exchanges, they have a big impact on the business. Proper purchase orders enable businesses to keep track of their inventory and costs and they form a vital part of project management.

However, managing orders can be extremely challenging and can lead to a lot of administrative burden. In fact, a whitepaper by IBM mentions 10 major challenges in B2B order fulfilment, namely:

  • Meeting order commitment dates/On-time fulfilment
  • Order accuracy/Processing errors
  • Workforce productivity/labour management
  • Ability to process more orders, faster
  • Managing order fulfilment costs
  • Implementing and better utilising technology related to distribution and fulfilment
  • Inventory visibility across all locations (including in-transit inventory)
  • Meet next day/same day delivery requirements
  • Managing production, distribution and fulfilment for multiple products/brands
  • Complex order configuration and/or pricing and quoting
ordering process improvement
Improving the ordering process: A top priority across organisations | Source: IBM

A simple way to better manage your order management process is to invest in a reliable order management system. An electronic PO system will enable digital creation and submission of purchase orders, PO tracking, and invoice payment from a central location. In addition, such a system will also take care of time-consuming tasks and enhance your supply chain management.

Here are 10 benefits your business stands to gain from investing in an order management system:

1) Enhanced Accountability: An electronic PO system will ensure that every employee using the system has their own login details. In addition, each user can be given permissions depending on your business needs, authority levels and approval process.

An electronic PO system will record every action taken on a purchase requisition, purchase order, or invoice with a date and time stamp, thereby allowing quick access to data for better and faster problem-solving, if and when needed. Furthermore, it also increases accountability and encourages employees to better follow procurement-related policies and procedures while keeping the function streamlined.

2) Better Spend Visibility: A PO system will allow you to get a bird’s eye view into your current cash flow. This will enable your business to better identify trends, decide on vendor/supplier retention, and negotiate better contract terms. In addition, such systems also help you better plan for expenses with budget forecasting, which in turn will allow your business to react proactively versus reactively.

3) Improved Accuracy & Efficiency: Manual processing and paper-based purchase orders & invoices can lead to errors. They can also be time-consuming to print, fill in the details, and get approvals. With an electronic PO system, everything will be digital, thereby ensuring no loss of files. Additionally, you can create automated approval workflows that will cut down the time on approvals and reroute approvals to other approvers when the main approver is out of office.

order management trends
Trend analysis of most common order management solutions | Source: IBM

4) Assists with Budgeting: With an electronic PO system, you’ll get all relevant insights regarding each and every purchase being made. In addition, you’ll be able to review and analyse this data, which can help gain insights into the company’s spending patterns. With a clear picture of business spends, you’ll be able to budget and better plan for the future, based on past spending decisions.

5) Helps Deal with Unexpected Expenses: PO systems can act as early warning systems for unexpected expenses as they record a new expense instantly as it is submitted to the system. This provides finance departments with better visibility into upcoming payments, thereby accelerating the tedious approval process.

6) Better Inventory Management: A PO system can also help with inventory management and keep track of orders. In addition, you can match POs against invoices to check for accuracy regarding incoming inventory. Furthermore, it’s possible to implement 3-way matching with an order management system, which further improves accuracy.

Many PO systems also enable integration with ERP systems and this will provide you access to pending and approved requisitions and purchase orders. The historical data will also allow the PO system to make better and more accurate recommendations for reordering inventory items.

7) Avoids Duplicate Orders: Duplicate orders are a common challenge when dealing with large volumes of purchase orders. A PO system can help eliminate this problem as it creates a digital, searchable record of every purchase, thereby providing enhanced visibility into your spending.

Click here to learn how QX helped a leading student accommodation business reduce duplicate orders to single-digit instances, within six months of implementation.

8) Helps Track & Control Spending: An electronic PO system will store all your purchasing information in one place, thereby making it easier to track where your money is going. Furthermore, certain PO systems are capable of sending updates in real-time, which provides you with current visibility.

Another benefit of having a PO system is the ability to control who can make purchases. You’ll have better controls in place and can prevent unauthorised people from placing orders without approval. In addition, you can automatically enforce policies with an electronic PO system; this will significantly reduce maverick spending.

9) Provides a Central Hub for Multiple Departments: A PO system deals with a huge amount of information that’s vital for business success. Members of the C-suite can utilise the PO system to quickly look at the company’s financials. Relevant departments can view incoming goods and services to better manage inventory. Finance departments can use the PO system to quickly match POs to goods received, invoices, and ensure that they’re paying solely for what was received and approved. Overall, the PO system ensures better collaboration and acts as a central repository of information for various departments across an organisation.

10) Acts as Legal Protection: Purchase orders act as a legally enforceable contract. A written agreement with details about the prices and quantity of items helps protect both the buyer and the seller.

A PO will guard your business against unexpected price hikes, incorrect orders, and wrong amounts. In addition, POs will also help in resolving any issues that might crop up and in turn, will help you avoid damaging your relationship with valued vendors.

ordering action items
Most common action items to improve ordering | Source: IBM


An electronic purchase order system can help eliminate several common challenges and better manage the overall procurement management function. With better visibility, control, and access to crucial financial information, your business will be able to stay agile and scale comfortably for better growth.

Are you ready to transform your PO management and the overall accounts payable process? QX’s proprietary PO system, QX Procurely allows businesses to handle orders from multiple locations, digitise/automate the ordering process, improve order tracking, and generate accurate reports, among other benefits. Get in touch with us to schedule a free demo today!

Originally published Dec 06, 2021 06:12:36, updated Dec 08 2021

Topics: Accounts Payable Automation

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