How to Set Up a Modern PO System

A purchase order (PO) system is an automated way to create and manage purchase agreements between you and your suppliers. Such a system can simplify your purchase-to-pay process and give you templated options for creating purchase order, while having a clear approval flow and a slick process to handle accounts payable.

PO systems have come a long way to meet today's efficiency and performance standards. Legacy systems are often cobbled together from spreadsheets or in-house databases. Looking back, they certainly played a role and helped businesses to put in basic controls over their purchasing management. However, they were also greatly limited in many ways such as requiring local access, having inefficient processes, and being poorly adapted to business changes.

Nowadays, modern purchase management systems are purposely built and mostly running in the cloud. They are now much more capable of helping businesses save time on daily tasks, enforce business rules, link purchases to budget control, make smooth and accurate payment runs, and gain valuable business insights. Sounded very powerful indeed. Better yet, they are fairly easy to implement. In fact, a well-designed modern PO system costs you almost no time to get up and running. In this blog, we take Approvol system as an example to show you how easy it is to set up in just a few simple steps and start to reaping benefits from it.

Initial Data Import

Processing data is the main task of all management systems. Initial datasets, such as lists of users, budget streams, suppliers, tax codes and so on, need to be prepared before Approvol can be correctly configured to make good use of purchasing management. It is required to turn the datasets into CSV files so that they can be imported into Approvol in bulk. Refer to Approvol's help documentation for a list of detailed data requirements and formats. Approvol performs automated error checks and validation so that you can be sure the prepared data going into the system is correct and immediately ready for use. Besides using the bulk import facility, you can also add the records into Approvol individually through dedicated screens.

Budgets Setup

Purchasing management without linking to budgets is only a half the story. Approvol allows budgets to be set up in a way that link purchase requests to different budget levels, which enables full control and monitoring of budget performance. And depending on the needs of your business, budgets can be set up in multiple ways.

Controlling your overall spending is quick & easy - simply define the monthly budget limits for each budget stream, at department and/or budget category level, without the overheads of managing multiple versions of budget sheets.

If you need more granular control, or you have large budgets with elaborate budget lines, version-controlled annual budgets composed of budget lines can be used instead. Once an annual budget has gone through the approval process, you have fine-grained budget control of your purchase orders.

User Permissions

One of the benefits of modern purchase management systems is that they help businesses to enforce policies and rules. In essence, it enforces who can do what. To this end, it is important to plan and implement user permissions so that the users can act according to and within given boundaries.

The easiest way to assign user permissions is to put users into groups based on their roles, and then assign permissions to the groups. Available permissions are view only, raise, revise, and approve, covering different areas such as purchase requests, invoices, and annual budgets.

It is also possible to define authorisation thresholds for Approvers, based on a single request and/or monthly-totalled, and likewise for each budget stream and/or all budget streams together.

Approvol automatically performs validation during the approval process to ensure that the approval authorisation limits are observed, and to abort the approval process when limits are breached.

Approval Rules

You can take advantage of Approvol’s flexible customisation to create approval rules that are best suited to your business’s needs. Each budget stream can even have its own set of approval rules.

There is a wide range of approval rule controls available like multiple approval progression modes, total number of approval levels required, single or multiple approvers in each level, as well as thresholds to reduce approval levels for small value purchase.

It goes without saying that approval rules can be applied to purchase approval, annual budget approval, and invoice approval.

The First PO

Once users and rules are determined, you are ready to raise your first purchase request. New purchase requests can be easily created either from a 3-step process, or by simply cloning an existing order. Order items can be selected from the system catalogue, or entered as custom items. A budget category or budget item can be selected in order to link a request to a budget for budget control purpose. A supplier contact and payment terms can be automatically populated once a supplier is selected from the quick finder. Attachments can also be uploaded as supporting documents.

During approver selection, additional accompanying notes and messages can optionally be sent together with the submission. Approvers can then approve, or reject and provide a reason.

Requests and POs are amendable and version-controlled. All key actions and decisions are recorded in the audit log.

Further Steps

After purchase requests are raised and approved, the next steps are to process associated invoices, review dashboards, and/or generate reports.

New invoices can either be created from purchase orders, or ad-hoc for a supplier. Approvol automatically allocates un-invoiced line items from the selected purchase order or supplier to the new invoice.

Dashboards in Approvol provide a top-down view and an overall analysis of your organisation's budget and purchasing performance. The reports provided by Approvol help you understand how your budgets, departments, and categories perform at a more thorough level. The combination of various dashboards and reports provide you with deep analytics into the purchasing and budget performance, and help to gain insights of the business operation to inspire strategic improvement ideas.

Summary

PO systems have come a long way. Modern purchasing management solutions, being built for the cloud, deliver easy access and continuous improvement. They don't just bring rich features and significant benefits to business, but are also easy to implement and onboard.

Approvol is a cloud based solution for efficient budgeting and purchasing management. If you are in the consideration of employing a modern purchase management system, contact us today to request a demo and find out more.