When it comes to the purchase order features there are a lot of organizations that provide purchase order software. All are different from each other therefore when you are investing in purchase order software, one should not take this task lightly, and more importantly, you need to ensure that you are choosing the right software.
To do so first of all, you need to know what is a purchase order and what are the essential purchase order features! So, let us begin!
What Is Purchase Order?
A purchase order is a legally binding document. It is a document that helps both supplier and purchaser. This document is generated by the buyer to avail service or deliver products in the future.
This document provides an advantage to the purchasing organization. What is that advantage? The purchasing organization does not have to make full payment to place an order.
From the supplier's viewpoint, they will not have to worry about the money risk because the supplier has a legally binding document. The full payment will be done after fulfilling the crucial information mentioned in the document!
Also Read: What Are the Purchase Order Process and Procedure in Companies?
What Are Important Types of Information Is Mentioned in the Purchasing Order Document?
Information is mentioned in purchasing order document are
- Product or service
- Specific brand name
- Product quantity
- Product price
- Delivery date
- Delivery location
- The billing address and so on
Every Purchase order has a unique number that is helpful to both parties (purchaser & supplier). Both parties can track the payment status and delivery status.
What Is the Need for Purchase Orders in Business?
Many organizations do not utilize purchase orders in business because they believe that it is a wastage of resources and a lot of time is consumed in paperwork.
Although this technique is not professional however it can work in a startup or when you have limited employees. Furthermore, when the organization grows and employees are added then it becomes complicated to manage purchase orders.
If there is no proper record of the purchase order then you will not be able to track important information. Employees can take advantage if no purchase order tracking is done. To avoid cheat and theft and to keep track of purchase orders automated purchasing order is required.
A purchase order is essential for business especially when you keep track of it with pen and paper technique. With this technique you will end up having lots of papers that will be hard to maintain and tracking them will be a complicated task as papers can be lost easily.
Moreover, it provides several advantages as you can check old purchase orders, order acknowledges slips, well-received notes, etc. It is also helpful in the procurement process!
According to Statista, “The procurement software application market will bring in an estimated 5.94 billion U.S. dollars in total revenue in 2021. The market is projected to experience a slow but steady expansion in the coming years, with a constant annual growth rate of 2.3 percent.”
Also Read: What Is the Role of a Purchase Requisition in Asset Management?
What Are the Essential Features of the Purchase Order System?
The essential features of the Purchase Order System are discussed below:
1. Purchase Requisition
An organization needs to ensure that its resources are not wasted unnecessarily. That is why purchase requisition is done in which managers take the decision either to process the requirement if yes then in how much quantity.
An ideal purchase order software will have an optimized and formalized way of requisition approval and that will help control cost as well. A good purchase order software has an automated requisition form which helps the employees to fill form quickly and saves their time.
2. Tracking Purchase Order
You must keep track of each purchase order and all detailed information of each work order is mentioned so that you do not pay twice or more than the purchase order price.
The tracking purchase order feature is one of the most important features. You can know the status of the purchase order how much progress has been made in the purchase order process.
Every important person such as finance team member, manager, the employee can also see if any update is made. Furthermore, they can check the update whenever they want to.
It is also helpful in the auditing process so that no misusing of PO is done & more importantly your PO record is clean.
3. Vendor Management
You need to know if the vendor is doing a good job or not! For instance, its product has quality or not. Is the vendor delivering products on time or not! With the help of these types of information, you can judge whether the vendor is performing well or not.
In an organization, there are several vendors for several purposes. It becomes hectic that which product will be delivered by which vendor this software helps in keep track of it. You can also track vendor history that helps make business decisions.
4. Data Analytics
An automated purchasing order allows you to keep track of purchase order history. It helps make business decisions. When you track purchase order status tracking you track crucial information that is essential for business such as how much time it is taken to complete the purchase order.
It is very important to figure out what kind of software will be beneficial for your business. That is why we have mentioned purchase order features that are must in a software and as we know every business has a different requirement.
Purchase order management is part of Asset management software that can be very helpful to businesses as it provides cloud-based services. It not only helps in purchase order management but also helps in several other activities such as keeping data secured and allows to access data from anywhere across the world.
Also Read: Why is Requisition Management Important for an Organization?
Frequently Asked Questions (FAQ)
1. What is a purchase requisition?
A purchase requisition is an official document from the employee to the manager describing the need for a specific product with the quantity mentioned. If this form is approved then it is sent to the finance department for the approval of quantity depending on the budget. After this purchase requisition become a purchase order.
2. What is a 3-way-matching in Purchase Order?
3-way-matching is a payment authentication method used to check that the invoice transmits it to a company for services provided to the company as a legal for products supplier.
It focuses on invoice verification by looking through specific records that show that the organization ordered and obtained the product or services for which the invoice is provided.
3. Can purchase order also helps in improving inventory management?
Making a purchase is the initial step for planning inventory. And it helps with inventory control when you have an easy-to-use purchase order system. Purchase orders help you keep track of which item you can then match your company with the invoice to review for accuracy so that you know exactly what is going on with your inventory.