I hope you like the picture above and it doesn’t remind you of your high school boyfriend of girlfriend. Take a look back at my previous post on purchase orders (PO) preventing maverick purchasing, it can give context to what I am writing about today which is the second thing that a PO process is helpful.
A Little Background First
I often talk about the two reason I am writing about. Yesterday I wrote about using PO’s to stop maverick purchasing. Today I am going to write about controlling the order before it becomes an order. The background is; out of the two camps nine times out of ten the company I am working with is more interesting in controlling the purchase before it becomes an expense rather than doing away with maverick purchasing.
Why You Ask?
Well, I don’t really know (this is the hard-hitting writing you come to expect from me). It seems like doing both would be the best approach. however, on these issues companies seem to pick and choose their battles and maverick purchasing is the one they opt out of.
Here Is What It All Means
Ah, the meaning of life… well life as it pertains to PO’s controlling the expense before it becomes an expense. The biggest impact a purchase order process can have is an approval process attach to the request. The steps start when a purchaser wants to buy something. They list out what they want and gets the order approved before it is sent to the vendor. This process has many advantages:
- The company controls the expense before it is committed
- Budgets are proactively managed
- The purchaser has a record of prior approval
- The invoice does not have to be re-approved (if everything matches)
So What’s The Catch
From a business, manager, process owners perspective, all of the things listed above look great. The idea is if you put a PO process in place that life would be good and the process would run the purchasing business and you would rarely have to look at it… not really tomorrow I am going to write about matching the invoices and the PO and automating the entire process… stay tuned!
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Categories: Accounts Payable Automation