Monthly Archives

September 2017

5 Purchase Order Myths

5 Biggest Purchase Order Myths You Need to Stop Believing In

By | Uncategorized | One Comment

If you think that purchase orders are not for your company or have some other misconception about them, here are the biggest 5 purchase order myths you need to stop believing in right now.

1. “Our Current System Works, We Don’t Need to Change it”

You don’t have to wait until the roof collapses on your head to start fixing it. By then, it will already be too late to do anything. The same goes with your purchasing process. The way your company does things may work now, but when was the last time you really analyzed if it is efficient. Have you considered if there was a better way to do things?

Furthermore, your current system might work well for a small company, but once you start expanding your business, it will start being more an obstacle than an asset. So start thinking about implementing purchase orders now, even if you don’t need them, before it is too late.

2. “We Don’t Need Purchase Orders”

This is one of my personal favorite purchase order myths. Some companies see purchase orders as an unnecessary step and think they can do without them. Just because your company is small or doesn’t order a lot, doesn’t translate to “you don’t need purchase orders”.

A purchase order is a legally-binding document that protects you in case any problems in purchasing arise. So next time the supplier fails to deliver the goods, you’ll be more than happy that you have that paper trail with you.

3. It’s the Same as Invoice

No. Purchase orders are definitely NOT the same as an invoice. Yes, they have a few things in common and share some same or similar features, but so do chickens and geese. Both are feathery and lay eggs. But you wouldn’t mix one for the other, would you?

A purchase order is created by the buyer and indicates his orders. On the other hand, an invoice is created by the seller and tells you about payment terms. So, no, they are definitely not the same thing. Think of a PO as a Contract of Sale and of an invoice as an Confirmation of Sale. One is use to order goods and the other is a reminder for the buyer to pay for the ordered goods.

4. Only the Purchasing Department Needs Them Anyway

Another quite common misconception about purchase orders is that they are only really useful to the company’s purchasing department. This is simply not true. Without them, you would have a much tougher job keeping track of your spending and knowing where your money is going. But with purchase orders, you can more easily identify critical spending areas and reduce the unnecessary ones.

5. They are Way too Complicated

This may have been the case in the past, when everything was done on paper, but hopefully your company is way past that point by now. These days you can create purchase orders online. Accounting software like Xero can allow you to keep the essential information, like your company name and information and the vendore’s name and information and just change the items you are ordering, their amount or some other detail.

Conclusion

Did we manage to bust the biggest purchase order myths for you? Dou think there are some other misconceptions about purchase orders we should have covered here? Let us know about them in the comments below.

We are about to launch Purchase Order Plus. Sign up for our email list to be among the first to know when it’s ready. Also, if you think you know what could make POP better, let us know in our survey.

negotiate with suppliers to avoid some purchase order mistakes

4 Biggest Purchase Order Mistakes You Need to Avoid

By | Purchase Order Plus | No Comments

Procurement is a an involved and often complicated process, so you can expect things not always going as smoothly as you intend. Mistakes are made, obviously, and this can hurt your business in many ways, not just financially. This is why, to avoid making these missteps, we have compiled the 4 most common purchase order mistakes you should avoid during a procurement process. Read this post carefully if you want to make better decisions during your negotiations with suppliers.

1. Only Working with One Supplier

One of the biggest purchase order mistakes is not sitting down with other suppliers. Whether it’s because they’re cheaper, some other perks, or simply a force of habits, many companies work with only one supplier time and time again. If this rings a bell, you are most likely missing on a bunch of good opportunities and maybe even some better deals that you can make with the other suppliers.

It might be faster to take the first deal, or just go with the already established vendor, but if you don’t listen to other offers from time to time, you are not doing everything you can to make your procurement process more effective.

2. Always Doing Things the Same Way

“We’ve been doing things like this from the beginning” is a perfect way to be left in the dust by your competition. Because while you’re standing and resisting change, they’re moving forward and past you. No market or industry is standing still. New, cheaper and more effective technology is always coming up, so take advantage of this. If you want your company to stay relevant in a competitive and evolving market, you have to embrace new ideas.

3. Not Negotiating a Price

Imagine this scenario. You need new supplies for your organization and ask your procurement agent to get a good deal from the supplier. He comes back, the supplies come to and when you ask him how the deal went, he just says that he accepted the first price the seller gave him. Big mistake on his part, obviously.

The price is not set in stone. By not negotiating and taking the first price from the supplier you are missing a whole lot of potential cost-saving opportunities and other deals. This can actually benefit both parties, you, as the buyer and the supplier, as not only can you get a better price along with some other perks, but the vendor will get a repeat customer more likely.

4. Thinking the Customer (You) is Always Right

Speaking of common purchase order mistakes, you know the old saying “the customer is always right”? The truth is, it’s just there to balloon the customer’s ego. In the end, you can be sure that the supplier got the better deal.

So, if next time your supplier offers a friendly advice, like a way to purchase their material for a lesser cost, take it. They know their product and service much better than you do, so make sure you use that knowledge the best you can. It pays to be wrong and to listen from time to time.

Conclusion

There are many more purchase order mistakes that we can talk about, but just by avoiding these 4, you are on a good way to make your procurement run more smoothly and ultimately getting a better deal.

Do you want to have more control over your purchase order process? Purchase Order Plus allows you to create and approve purchase orders on your mobile phone or on the web. All you need to do is integrate POP with your Xero and your users can easily generate purchase orders. Then the approvers you’ve selected can approve the order or reject it.

Want to be the first to learn more about Purchase Order Plus? Sign up for our mailing list here.

Business handshake

Procurement and Purchasing: What are the Differences?

By | Purchase Order Plus | No Comments

Many organizations have the need to “procure” or to “purchase” something that they require to successfully run their business. The problem is when they start you start to use the terms procurement and purchasing interchangeably, as if they are one and the same. Because they are not. In this article, we will explain the differences between the two and help you clear the air as to what each of them is and how they are related to each other.

The Procurement Process

Let’s start by identifying the individual processes for both procurement and purchasing. The procurement process itself can often be very involved and it includes a number of steps. These steps are:

  1. Identifying the requirement
  2. Authorizing the purchase request
  3. Approving the purchase request
  4. Procurement itself
  5. Identifying the vendor or supplier
  6. Asking and acquiring a quotation from the suppliers
  7. Negotiating the best deal with the suppliers
  8. Selecting the best supplier based on the quotes and negotiations you’ve had
  9. Acknowledging the purchase order
  10. Shipment notice
  11. Receiving the goods you’ve ordered
  12. Invoicing
  13. 3-way match
  14. Paying the supplier

As you can see, the procurement process is quite extensive, but it’s not set in stone. This list will depend a great deal on the specific nature of your business, its size and needs. Naturally, a small company will have different requirements than a large, multinational one. So keep this in mind when you start the procurement process next time.

The Purchasing Process

If you’ve been paying close attention, to the typical procurement process above, you should have noticed several items that have to do with purchasing itself. Those items are what makes the purchasing process and are:

  1. Acknowledging the purchase order (PO)
  2. Shipment notice
  3. Receiving the goods you’ve ordered
  4. Invoicing
  5. 3-way match
  6. Paying the supplier

So, as you can see here, purchasing process is a part of the procurement process. However, whereas the procurement process should be tailored to the specifics of your business (size for instance), the purchasing process is much more routine and the steps listed here will mostly stay the same regardless of the organization. Here, you should be concerned with the best business practices in your industry.

Conclusion

As you can see, there are numerous differences between procurement and purchasing. But in essence, it all boils down to the fact that the purchasing process is just a part of the procurement process. In addition to purchasing, procurement also includes vendor selection, strategic vetting, negotiating and establishing the payment terms and contract negotiations between the buyer and seller. Only after all of this is cleared can you go to purchasing itself.

So, if you’ve been using the terms procurement and purchasing interchangeably all this time, it’s high time to stop that practice and learn which is which. Hopefully, this article has managed to clear the confusion you might have had regarding the use of these two terms.

You know what can make both your procurement and purchase process run more smoothly? Faster purchase order (PO) approval. With Purchase Order Plus (POP) you can speed up the creation and approval of your POs when using Xero mobile applications. All you need to do is connect POP to your Xero, customize your PO and invite your employees. They can then use either the web browser or mobile app to submit purchase orders, which you can accept or decline with just a click or tap. If you’d like to know more about Purchase Order Plus, such as when it’s going to launch, be sure to sign up for our mailing list and be the first to get informed.

Got any questions about procurement, purchasing or Purchase Order Plus? Let us know in the comments below or visit and like our Facebook Page.

Purchase order and invoice differences

Purchase Order and Invoice: What Makes These Documents Different?

By | Purchase Order Plus | No Comments

When it comes to business transactions, your organization needs to use both a purchase order and invoice. As you’ll find very soon, both of these documents are important, which is why this article will help you to understand the difference between them.

Defining a Purchase Order and Invoice

Before we get to examining the differences between the two, let’s take a quick look at what is a purchase order and what is an invoice.

A purchase order (PO) is a document created by the buyer delivered to the vendor. The purpose of a PO is to indicate the description quantity, quality, rate, type or some other characteristic of a good that the buyer wants to acquire from the seller. In turn, once the seller receives the PO, it becomes a legally binding contract and both sides must honor it.

Once the buyer receives the goods he ordered from the seller, the later can issue an invoice to him, requesting payment for his goods. Basically, this is another document that tells the buyer that payment is due. This means that a commercial invoice is prepared based on the purchase order and it is normally issued once the shipment is ready. This document should contain the details of both buyer and seller, product details, order number, price, terms of payment, terms of delivery and other details the parties have agreed in their contract.

Purchase order should contain:

  1. Buyer’s information (name, address and contact)
  2. Seller’s information (name, address and contact)
  3. Date when the PO is issued
  4. Details of goods such as description and quantity
  5. The amount of money the buyer is due for these goods
  6. A purchase order number
  7. Terms and conditions
  8. A signature of the person (purchase manager or procurement officer) responsible for authorizing the purchase order.

Invoice should contain:

  1. Buyer’s information (name, address and contact)
  2. Seller’s information (name, address and contact)
  3. Details of goods sold
  4. The agreed price between the buyer and seller
  5. Total amount the buyer is due to the seller
  6. Discounts (if applicable)
  7. Taxes (if applicable)
  8. Purchase order number
  9. Invoice number
  10. Date the invoice is issued
  11. Seller’s signature

Main Difference Between a Purchase Order and Invoice

Now that you understand what the two are, let’s go over some of the differences between a purchase order and invoice.

The most important difference is in who creates the document and to whom it is addressed. A purchase order is a document raised by the buyer and sent to the seller, while on the other hand, an invoice is created by the seller and sent to the buyer. This makes a purchase order effectively  a Contract of Sale, while an invoice is a Confirmation of Sale. 

In a nutshell, a PO is used to order goods from the vendor, while an invoice should “remind” the buyer to pay for the goods he has ordered.

Conclusion

As you can see here, while there are some similarities between a purchase order and invoice, such as both being legally-binding commercial documents, as well as both containing the necessary details of buyer and seller and having a PO number, they serve very different purposes. This is why it’s important not to mix up the two documents.

Need to create a purchase order quickly? Sign up to our launch list and be the first to find out when Purchase Order Plus is ready. Do you have a feedback for us? Send us an email at info@purchaseorderplus.com and don’t forget to complete our short survey and let us know how we can improve POP.

Any questions about the differences between a purchase order and invoice? Let us know in the comments below and be sure to like our Facebook page.

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Purchase Order Plus Update: New Features

By | Development, Purchase Order Plus | No Comments

As you well know, our software is still under development, and we are excited to provide you with this Purchase Order Plus update and let you know what’s new with POP. We are including several new features that we firmly believe you, the customer, will like.

So, what’s new with POP software?

Purchase Order Plus Update: Real Time Reporting

Purchase Order Plus allows real time visibility of any purchase you make directly in your system using the POP Dashboard. One of the features you will be able to use here is purchase order reporting. If you are unsure what bills are still to come, you can refer to a very helpful snapshot of your company’s unbilled orders  and see your unbilled PO report in “real time”.

Reporting

POP Dashboard

Purchase Order Plus Update: Workflow

We also wanted to offer you a way to better control your purchasing function and because of this, we are excited to present you the purchase order workflow. Using our software, you can set a customizable workflow for PO approval. This will allow you to set who can request a purchase order (requestor) and who can approve it (approver).

Once the order is created, it can enter the approval workflow, where you can set rules based on the following filters:

  • Xero Tracking Code 1 Matches or Not Equal To
  • Xero Tracking Code 2 Matches or Not Equal To
  • Xero Account Matches or Not Equal To
  • Supplier Matches or Not Equal To
  • Amount Operators “Less Than”, “Greater Than”, “Matches”, “Not Equal To” or “Between”

Purchase Order Plus Update: Delegate Users

Another new feature we have included in the Purchase Order Plus update is the ability to easily delegate users and keep control of who can create POs. For example, if you want to allow an employee to create a purchase order, but not give them full access to your Xero accounting system, POP software allows you to do this by inviting the employee as a user via the POP setup screen. From here, they can create or approve POs and they will sync directly with Xero. Since POP software directly syncs with your Xero file, there’s no need for employees to access Xero directly. Instead, they can access suppliers, items and account codes as easily from their end.

User Setup

Purchase Order Plus Update: Create and Approve POs on Mobile

Finally, Purchase Order Plus users can create and approve purchase orders using their mobile devices. Since POP directly integrates with your Xero file, you can easily enter the information in the PO. This means that all items and account codes will be synced with Xero and when you start typing your vendor’s name, POP will start a search for its information on your Xero account.

Thanks to this, your users will now have the ability to create, approve and send purchase orders on their mobile devices and speed up the entire process for your organization.

PO’s on Mobile Device

Launch List

Want to know more? Sign up to our launch list to guarantee you get notified when POP is available. Got any feedback? Send us an email at info@purchaseorderplus.com and be sure to complete our survey to let us know what features we should develop next.

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Best,

Bryan

CEO Purchase Order Plus