How Intelligent Document Processing can improve your purchase order system

Purchase order system

Making purchases is something that everyone does. Everyone wants to know that they will receive what they ordered, and the seller wants to ensure they will be paid for what they sent. This is no less true for businesses. Regardless of the size of the company, there will always be a time when a business will need to purchase goods from a supplier. 

Good business is the art of doing things right the first time so that errors and mistakes cannot affect the bottom line. In the realm of purchasing supplies, several things can go wrong. Finding the proper way to prevent this will save businesses money and the hassle of fixing the problem.

Organizations that make purchases for supplies from other companies should have the correct purchase order (PO) system in place so that errors can be caught before it is too late. A purchase order system is a platform that allows businesses to create purchase requisitions that can then be approved and turned into purchase orders. 

The system sends the purchase order to the vendor, and the supplier sends the goods. Once the company receives the goods they ordered and the invoice from the vendor, the PO system matches the invoice with the purchase order and the receipt for the goods. If all three line up, the invoice is sent to the Accounts Payable department so the vendor can receive the payment. 

These purchase order generator and tracker systems make it easy for businesses to verify the status and quality of the purchase order from creation to payment. Additionally, a purchase order tracker system allows the company to keep accurate records of purchases, keep an eye on vendor relationships, and ensure they only pay for what they receive. Rossum is an Intelligent Document Processing platform that captures data from purchase orders automatically so that verification, inventory tracking, bookkeeping, and many more tasks can be performed with accuracy and ease.

Types of purchase order

Before a company implements a purchase order system, it is necessary to understand the details of purchase orders. A purchase order is a document sent by a buyer requesting specific goods from a vendor. Once accepted by the vendor, a purchase order acts as a legally binding contract between the buyer and seller. It can be helpful to look at an example to get a better idea of how purchase orders work. 

In a hypothetical purchase order example, assume Company A, a T-shirt manufacturer, wishes to purchase 100 yards of cotton fabric. To do this, they send a purchase order requesting this fabric from the vendor. The purchase order contains the company information, description of the goods, quantity, price per unit, and the total order amount. The vendor receives this document, understands the request, and accepts it. The purchase order is now a contract, and the vendor sends the goods as requested. After a few more steps, Company A pays the vendor according to the amount on the purchase order.

The most comprehensive purchase order system will be able to generate and track all types of purchase order documents. These documents exist in four primary categories. There are standard purchase orders, planned purchase orders, blanket purchase orders, and contract purchase orders. Knowing the difference between these types of purchase orders can be beneficial. 

A standard purchase order is created for one-time purchases and contains detailed information regarding the goods, cost, and timeframes. Planned purchase orders are similar but work as longer agreements to purchase goods from a specific vendor over time, and dates are tentative. A blanket purchase order is a little vaguer and is generally used as an agreement to purchase goods within a period of time without the details of delivery dates or specific quantities. Finally, contract purchase orders act as contracts between the buyer and seller without actually purchasing any goods. These purchase orders are useful for ongoing buyer-vendor relationships.

These types of purchase orders include data that must be recorded and verified in a purchase order system. One way to do this is with AI-powered software like Rossum. Rossum can capture all of the data from purchase orders and automatically match them to invoices and receipts so that vendors can be paid promptly and your company can accurately make and receive orders.

Purchase order management process

The purchase order management process follows certain steps that are essential to the purchasing process and business efficiency. A company that needs to purchase supplies should start by creating a purchase requisition. This document is for internal purposes and is usually sent by the department that needs the supplies to the finance department for approval. A purchase requisition includes a description of the required supplies, quantity, vendor information, and price. The purchase requisition is then approved by the finance department which issues a purchase order based on the purchase requisition data. Purchase orders place the order and can be compared to the “cart” and “checkout” sections in online ordering.

The purchase order is then sent to the vendor for approval. If the vendor approves and accepts the purchase order, they will begin to fulfill the order. On the other hand, if the vendor rejects the purchase order, then it must be discussed further. Assuming that the vendor does accept the purchase order, the buyer will eventually receive the goods and create a receipt for them. 

This receipt will outline the exact items and quantities so that the data can be checked against the purchase order. Once all goods are received, the purchase order, receipt of goods, and invoice are compared. If everything matches, the invoice is approved and sent to the finance department for payment. 

For companies that need to create a purchase order, a digital purchase order template can be found online. One of the essential parts of the purchase order management process is storing the data and keeping records. Because the invoice cannot be paid without checking it against the purchase order and receipt for the supplies, there must be records of these documents in a database for ease of comparison. 

Rossum is an Intelligent Document Processing platform that can automatically capture the data from these various documents and store it in the business system used by the company. With Rossum, the data from these documents become easily accessible and verifiable so that your business never pays for goods it did not receive. 

Purchase order management system

To make the purchase order management process more straightforward, businesses can implement a purchase order management system. A simple purchase order system makes it easy for any department in the company to create purchase requisitions and send them to the finance department. Essentially, whether it is an online purchase order system or software, these platforms automate various aspects of the purchasing process. 

Additionally, a PO system should act as a tracker so that the purchase order can be fulfilled accurately and on time. The best purchase order management system will have the data from the purchase order, receipt of goods, and invoice stored in the database and be able to automatically perform the 3-way match to approve the invoice.

For retail businesses, a retail purchase order management system would be ideal. The best retail PO system will have the capability to store inventory data so that the business would be able to quickly see if they need to create a purchase order for any supplies that are running low. Whether for retail businesses or any other organization, a purchase order management system is a helpful tool for generating and keeping track of purchases. 

These systems make it easy to keep all of the digital documents in one place so that making use of the data is simple. In addition, the most robust purchase order management system will be cloud-based, like Rossum, so that the data can be accessed and updated from almost anywhere.

Purchase order management software

Most purchase order management systems will be in the form of software. A purchase order management software should be an aid to the organization instead of a burden. For this to be possible, the software should be cost-effective, quick and easy to implement, and reliable. Even a simple purchase order software should be comprehensive enough to handle all the purchase-related documents and data businesses utilize. It should be able to create purchase orders, relay them to the right department, match the invoice to the purchase order and receipt, and verify all of the data.

The best purchase order software is one that is based in the cloud so that it can be consistently accessed and updated. Cloud-based software can make it easier for the separate departments that are involved in purchasing decisions to see the data as it is coming in.

The best software will also have Optical Character Recognition capabilities so that all unstructured data in any document can be easily detected and exported into the proper database. Rossum is an example of a software that can automatically capture data from various document types, whether from scanned PDFs or Excel spreadsheets, so that the data from purchase orders, invoices, receipts, and quality inspection sheets can be stored and accessed in one, centralized platform.