If you want to get ahead with your purchase orders, it’s time to look at the best practices to guide you. When you use best practices, you ensure that you have accuracy and control over your purchase orders and can operate at a more efficient rate.
Basically, a purchase order is a document between the supplier and the buyer. The buyer issues it to the supplier stating what types of products and amounts they want at an agreed-on price. Purchase orders are implemented to manage the purchasing of different products and services through external suppliers.
Share the purchase order with multiple departments
Both parties need to have several copies of the purchase order. One needs to be for the buyer, while the other needs to land in the hands of the supplier. In addition, other business departments like accounts need to have one. A great way to get around this paper trail is to use a digital platform to get rid of double-ups in the wrong places and keeps a clean track record of what’s been issued.
Know the source of the purchase order
Before issuing any payments or sending out goods, make sure purchase orders come from authorised employees in the company. For instance, several teams in a marketing company might need to order banners for an upcoming event. However, if all the team members who needed one issued their own purchase orders, it could get confusing. In addition, they might not have authorisation or access to the budget to actually pay it. Make sure you know who it’s coming from and this will avoid any mix-ups or wrongdoing.
Look at using purchase orders that can be processed at a departmental level. This stops purchase orders from turning into a bottleneck with one person waiting to approve it all. However, not everyone in the department can order it. Rather a nominated, authorised person can keep things moving but it makes certain people accountable.
Manage changes properly
Often, people will change their minds on how many products they want and this will impact the ordering cost of the purchase order. When changes are made, they need to go through a change order process which takes into account the alterations in product and ordering cost. Both parties must confirm they are happy with the new ordering cost and an updated version will be produced. Again, this is where a digital platform comes in handy. These changes can be made and can prompt verification from both parties. This prevents things from getting buried in emails and encourage clarity through the process.
Keep up with transparency
Make sure your purchase orders are recorded properly and available to appropriate parties. This is an important component for auditing, both internally and externally. It’s good to keep a transparent record of every element within the purchase order. This means you should track the amount of products with each purchase, the availability, the budget and contracts made between sellers and buyers.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.