What is a purchase order and how do you process it efficiently?

When employees purchase items, it is often convenient to record the orders as purchase orders. Then a responsible can give approval before they actually order the products. In this way, you agree the flow in advance, avoiding discussions afterwards. This is especially useful for larger organizations working with multiple locations. Consequently, the purchase order is often seen in sectors such as education and construction.

Working with purchase orders: why should you?

First of all, you have instant insight into the items you will receive, as well as their cost. When the products are shipped by the supplier, things like price, quantity and order and delivery time are already set. So being surprised afterwards by an unexpected price on the invoice is out of the question.

Once you have the items in, you compare invoice and receipts and book the items in. A coordinated and controlled process, provided you do it the right way.

‘Purchase-order issues’: what could be better?

When you purchase items through a purchase order, you want to match the delivery and invoice to the orders and receipt. If there are discrepancies, then financial administrators must go through all the rules to check where exactly the gap is. A quick consultation with a colleague is usually done by e-mail. All in all, this is a time-consuming process. And by using different channels, the overview is often lost.

The many repetitive manual tasks involved in this process also make it inefficient and error-prone. In short, an improvement effort is not a luxury for many organizations. But where do you start?

The many repetitive manual tasks involved in this process also make it inefficient and error-prone.

From creating a new purchase order to processing an invoice: here’s how to become more efficient

Suppose you order some computers. The selected supplier will deliver it next month. But you will receive the invoice now. When it arrives, pay and process it immediately. So then it’s still waiting for the computers to actually come in.

If you use smart OCR software with a matching module for processing, the software first looks at whether there are receipts. If not, the invoice just stays there for a while. Once you receive the items, the system compares the invoice lines with the receipt lines. If they match, the invoice is automatically transferred to your ERP package. But if there are other costs on the invoice that were not discussed in advance (such as transportation costs), they will be added separately. Often you can set the invoice to go past a reviewer if there is a large cost difference, but small price differences are processed automatically.

Tip for an effective process: educate suppliers as well as employees!

For matching to be effective, all noses must point in the same direction. For example, it is important that employees record their receipts on time. Because if these remain, so do the invoices.

In addition, it is crucial to educate suppliers. Ask if they can include the order number by default on their invoices. Only then can the receipt lines of that order be automatically linked to the invoice lines.

Processing purchase orders with smart OCR software: the benefits at a glance

Efficiency boost and time savings

Suppose 10 laptops were delivered and invoiced. In other words, there is a match. Then smart OCR software handles the receipt automatically. Also, the system completes the booking immediately. Everything is in your ERP package in the blink of an eye – without you having to perform all sorts of manual operations. That’s the power of 3-way matching.
Smaller margin of error

Good OCR software performs the comparison and uses clear colors to show you the state of affairs. For example, a green line represents a complete match, while an orange line tells you that the price differs. This allows you to see at a glance where things are and are not going well. This makes you much more alert to mistakes.
Get a better grip on your process

Because smart OCR software performs the comparison instantly, you’re in control right at the front end. If there are discrepancies, you can intervene before the invoice is paid. In short, you have more control over your process.

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