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Transform Purchase Order Management Processes with AP Automation

Accounts Payable Software
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Regardless of the size, every enterprise has to go through the procurement process to purchase necessary products or services from the vendors. The purchase order (PO) management process makes up a significant part of the procurement cycle. The other steps, such as identifying the need for goods or services, sourcing suppliers, and making vendor payments, depend on it. As it is the central part of the procurement process, optimizing it can have many benefits that extend throughout the procurement process and helps to generate higher departmental efficiency. So, having an effective purchase order process is essential for businesses that aim to optimize the procurement process and build and maintain good supplier relationships.

In this article, we have discussed what a purchase order is and suggested a few effective ways to make the purchase order process more efficient.

What is a Purchase Order Management?

A purchase order is an official document the buyer sends to the vendors to confirm their intention to purchase specific products or services. Usually, a PO includes various details of the purchase deal the buyer intends to purchase, such as price, quantity, etc. The purchase order management process comprises multiple steps, including creating, reviewing, and issuing. It is imperative for businesses to manage PO processes effectively as it ensures the company’s purchases are necessary and justified.

Earlier were the days when PO management processes were handled manually with paper-based processes. These purchasing processes can be fraught with inefficiencies, and there will be a higher chance of human errors and process delays. In contrast, PO management automation enables businesses to automate most of the tedious, time-consuming processes involved in the PO process. It helps the AP teams to speed up the process, leading to stronger supplier relationships and price negotiations.

Steps Involved in the Purchase Order Process

Although different organizations approach PO management in different ways, there are a few common steps in the PO process every AP team manages, such as:

  • PO Creation: Identifying the need to purchase specific goods or services and creating purchase orders is the first step in the purchase order management process. Usually, a PO includes various details like product name, quantity, price, and expected delivery timeline. The purchase order will be sent to the internal approvers, who will approve or reject the PO based on the priority of the requirement.
  • Vendor Approval: Once the PO is approved internally, it will be sent to the vendors asking them to submit RFQs (Request for Quotations). The vendors will send the quotations for supplying goods and services, and the buyer will approve the vendor’s bids based on various criteria like price, quality, and payment terms. The POs approved will be securely stored for further reference.
  • Deliver, Approval and Payments: After receiving the goods or services from vendors, the buyers will verify invoices with PO and receivable notes to ensure the contract terms are met and make payments to vendors accordingly.

Improving Purchase Order Management

The purchase order process involves many tedious tasks making it difficult for the AP teams to manage. Especially the manual PO management process is time-consuming, resulting in inefficiencies and delays that can affect the entire purchasing process. However, a few steps can help you manage the purchase order process effectively.


Accounts payable automation offers a range of benefits to businesses of all sizes. For instance, highly advanced AP solutions provide templates to speed up the PO creation process and allow the AP teams to automatically send the purchase order to relevant people for approval.

Centralize Information

Accounts payable solutions centralize the crucial accounts payable information, including purchase orders, on a secured cloud-based platform that can be easily accessed by authorized people. So, the AP teams can quickly generate purchase orders and make sure they are securely accessible from anywhere.

Create Robust Policies

Having a clear policy in place is essential to ensure that the employees follow the right procedures for managing PO processes. Make sure you document the company’s purchase order procedures and policies, keep everything up-to-date, and ensure the stakeholders are informed about the policy changes.

Build Strong Vendor Relationships

Last but not least, building and maintaining good relationships with vendors is imperative for every organization as the final output quality will purely depend on the raw materials (products and services) offered by suppliers. So, always ensure that you communicate with the suppliers regularly and respond to their queries quickly to build trust and maintain it throughout the project lifecycle.

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