Supply chain management process steps

What does Your Supply Manager do Every Day? Supply Chain Management Process Revealed

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Here’s a question, do you know what your supply manager is up to when you’re not looking? Don’t worry, I’m not saying that you should watch him  like a hawk and make sure all your supplies are still there, but rather how much do you really know about what he is doing to ensure a successful and cost-effective supply chain management process?

If I am to guess, not a whole lot. Which is why I created this article to help you better understand the supply chain management process, along with its five steps. Hopefully, with that, you’ll also have even more respect for all the hard work and help from your supply manager.

What’s in the Supply Chain Management Process?

Now, your supply chain management process or SCM can look anything you want really. This will depend a lot on your industry, market you are in, company culture, supply manager and a bunch of other things. Of course, you probably want it to be as simple and effective as possible.

Which is exactly what the Supply Chain Council went for when they created their  Supply Chain Operations Reference model or SCOR.

SCOR was created with the idea to help businesses of all sizes standardize and improve their SC processes and includes best practices every supply manager needs to follow to identify and resolve problems in the supply chain.

The model includes five steps or stages:

  1. Plan
  2. Source
  3. Execute
  4. Deliver
  5. Return

Let’s take a closer look at each stage.

Step 1: Plan

Now goal gets achieved without first making a good plan. The first step of a supply chain management process is planning, which involves creating a viable strategy that will return the maximum results, i.e profit or ROI.

This step poses a question to the company:

Should we manufacture the product or component ourselves or should we purchase it from a supplier?

From here, you get to decide whether to:

  • Manufacture domestically
  • Manufacture internationally
  • Buy from a domestic supplier
  • Buy from an international supplier
  • Outsource manufacturing

And these are just five options, with lots more in-between. But it’s essential to get this first stage of the supply chain management process right, because your decision here will influence the later four stages heavily.

Step 2: Source

The second step of a SCM process involves finding the best and most reliable suppliers. This will ensure the production process goes without a hitch. Building a strong and lasting relationship with suppliers is crucial. Any mistake by the supplier will reflect on you as well.

This stage includes constant assessment and revision of the supplier’s performance and making sure they meet your requirements.

Step 3: Execute

In this stage, the supply manager probably has the most on his plate. He needs to ensure all stages, from designing, producing, testing and packaging of manufacturing a product that will ultimately arrive in the customer’s hands go without problem.

To do that, the supply manager needs to schedule all of these activities and then monitor their performance closely. The goal here is to achieve maximum efficiency and nothing below.

Step 4: Deliver

The finished product won’t matter much to the customer unless you deliver it at the right time, right place and in the right quantity.

This is why logistics plays a huge role in the fourth stage of the supply chain management process. Anything can go wrong once the product leaves the manufacturing facilities, whether in the warehouse, with the third-party carrier, or with the invoicing and payment systems. To ensure things go smoothly this close to delivering the product to the final customer, the supply manager can needs to monitor logistics and keep track of everything using modern online logistics tools.

Step 5: Return

Finally, in the last stage of the supply chain management process, the supply manager needs to deal with defective or damaged products, replacing them, authorizing and providing refunds for them.

Needless to say, your company needs to listen carefully to every query and complaint by the customers and respond quickly. This is usually the stage which can hurt your organization the most, especially if you refuse or don’t acknowledge the return or refund quickly enough. Then you can say goodbye to that customer.


Having an over complicated supply chain management process helps no one. Not your organization, not your customers or supplier, no one. The SCOR model on the other hand ensures that your products get in the customers satisfied hands.

Do you have any questions or comments about this supply chain management process? Let us know in the comments below and don’t forget to sign up for early access to Purchase Order Plus software.

Best accounting software for Mac and Apple

Top 6 Accounting Software for Mac and Apple Users

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PC and Mac users are often at odds with each other, with each side claiming superiority over the other. One thing that PC users can boast in conversation with their Apple-loving nemesis is the bigger variety of software that they have at their disposal. For example, PC users can choose from quite a number of accounting apps, while their Mac friends don’t have as many options.

That is not to say, however, that there aren’t plenty of accounting software for Mac users to choose from. In this post we’ve selected with we believe are the top 6 accounting and invoicing apps for Mac, based on their features, UX, customizability, cost-effectiveness and other criteria.

1. Xero

Xero is one rare thing that both PC and Mac users can agree that it is good, as it works great on both platforms. It is choke-full of functionalities, but at the same time has a simple layout, which makes the task of using it less daunting, particularly for non-tech savvy and first-time users.

In addition, Mac users will be happy to hear that they get all the features their PC counterparts do as well, which often isn’t the case.


  • Simple layout
  • Can use Xero mobile to track your account in real-time
  • Can easily integrate a 3rd party app. For example, Purchase Order Plus is an add-on software for Xero mobile which allows better tracking, easier approval, reporting and cashflow control for purchase orders in your company. You can sign up for early access here.


  • There’s no option to create new business documents
  • No option to add a digital signature

2. AccountEdge

AccountEdge comes in two versions – AccountEdge Basic for $99 and AccountEdge Pro for $399, for a single-user licence. Each additional workstation will cost you another $249 and for a package of five workstation you need to pay $999.

If you are running an ecommerce business, AccountEgdge can be integrated easily with Shopify. This software includes all the usual features you might expect in an accounting software, but with an additional option to sync it with the cloud (for a fee though), track your commissions, monitor your inventory and prepare taxes.


  • You can purchase the entire platform in one lump sum instead of paying monthly fees or subscriptions
  • Can connect with Shopify and other 3rd party apps
  • Includes a 30-day free trial


  • A lot of the really useful features (like cloud syncing) have to be paid additionally and don’t come with the basic version
  • One workstation is $99, but if you want more workstations (for your accountant or employees), that will cost you a lot more

3. Quickbooks

Quickbooks is a good option whether you’re doing accounting in-house or via cloud and offers a seamless payment for SMEs. The interface is also one of the easiest to use when it comes to accounting apps (both Mac and PC) and you can use 3rd party apps and widgets with it.


  • Cheap
  • User-friendly interface
  • Easy to integrate 3rd party apps


  • Needs more features to be useful for larger companies
  • Sometimes gets double entries
  • Security is not the highest if you use an online version

4. ZohoBooks

Zoho offers an entire suite of SaaS applications and online productivity tools, including a CRM platform, document editing tool, online chat, mail client, IoT management platforms and more. Their online bookkeeping software ZohoBooks is just one of them.

ZohoBooks itself offers a wide variety of nifty features, including capturing all expense receipts in one place, bulk payment accepting, automated banking and more.


  • Good price
  • Automated banking
  • Easy to set up and send invoices


  • Doesn’t create PDF files
  • Good if you’re a freelancer. small or medium business, but won’t be of much use to larger businesses

5. GnuCash

GnuCash is actually an open-source project, but don’t let that deter you from using it. Updates are coming out every three months and it’s been like that for the past 20 years or so. It’s compatible with Mac OS, but also Linux and Windows.

There is a tradeoff however. It’s not for someone who wants an easy-to-use, one-click-solves-the-problem type of software. GnuCash can be overwhelming for first-time users (but you’ll get the hang of it quickly), but if you like to keep every little detail under control yourself, it’s definitely for you.


  • Open-source, with updates every 2-3 months
  • Free
  • User-friendly (it’s basically made by users)


  • Okay for freelancers, individuals and small businesses, but if you run a larger business look elsewhere
  • Not for beginners

6. xTuple PostBooks

Another open source accounting software for Mac, but unlike the previous one, xTuple is an ERP software, meaning you can do a lot more than just accounting with it. If you don’t need an entire ERP system, then you can go for xTuple PostBooks, which includes not only accounting, but also CRM, sales and inventory functions.

xTuple PostBooks is free, but just like with GnuCash, perhaps not the perfect solution for beginners.


  • Open source
  • Customizable and easy to use once you get the hang of it
  • Offers custom reporting


  • Slows a bit if you’re using larger files
  • Report-making is not the easiest
  • Customer relationship management could use some more functions


There you have it. 6 Best accounting software for Mac. Whether you’re a small, medium or large business, you’re sure to find what you need in one of these.

Do you have any questions or comments? Let us know in the comments below and don’t forget (if you haven’t already) to subscribe for early access and updates to our Purchase Order Plus add-on software for Xero.

Always get an Advanced Shipping Notice before receiving delivery

What is an Advanced Shipping Notice? Best Receiving Practices

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Most businesses want two things – more sales and fewer costs. You want products on shelves in your store or in the warehouse faster and to avoid being out of stock. Because of this, your company needs to pay close attention to its inventory and to reduce losses as much as possible. One thing that can help you here is an advanced shipping notice or ASN.

In this article, we’ll discuss what are advanced shipping notices, what do they consist of typically and what would be the best practices to follow when receiving ASNs.

What is an Advanced Shipping Notice?

An Advanced Shipping Notice is a notification of an upcoming delivery sent in advance of the shipment to the buyer by either a supplier or the 3rd-party logistics company. The ASN is sent in an electronic format over the Internet, either as in an electronic data information (EDI) or extensible markup language (XML) format.

In order of sending, the ASN is sent before both the shipment and the invoice, following a delivery, although many buyers have a non-acceptance policy for shipments for which they haven’t received an ASN before it.

What Does an ASN Include?

What an Advanced Shipping Notice will include largely depends on the shipment itself and on the requirements of the buyer, but it usually includes the following items:

  • What item(s) are in question
  • Their quantity (how many items)
  • When will they be shipped (date and time of the delivery)
  • Physical characteristics of the shipment (weight, type of packaging, how many packages)
  • How will the items be transported
  • Information about the carrier
  • Location information
  • Pallet codes

Of course, besides these informations, the buyer can request additional ones from the supplier or the 3rd party logistics company.

Best Practices to Follow When Receiving ASNs

When receiving an Advanced Shipping Notice or the delivery itself, the receiving personnel should adhere to the established written policies of their company. These policies should also be sent to the supplier or the 3rd party logistics company in order for them to understand why their shipments might be returned.

On Warehouse Level:

  • Require an Advance Shipping Notice (EDI 856) before the delivery
  • Require a Shipment Status Message (EDI 214) prior to delivery
  • Request an appointment to be scheduled
  • Scan cartons when receiving products

On Store Level:

  • Don’t let your sales personnel deal with receiving products. Instead, have different people to receive the shipment.
  • Take deliveries only through authorized doors. For instance, don’t use the same door your customers are using.
  • Don’t bring anything to the sales floor before it is properly received and checked
  • Set up policies in case of incomplete purchase orders (PO)
  • Make sure the supplier is certified before carton-receiving their deliveries
  • Establish a policy for non-readable barcodes
  • Establish a policy for receiving “closed” POs. Closed Purchase Orders are those POs that no longer need to be modified in any way.
  • Set a time limit for receiving direct store deliveries into the inventory system. This shouldn’t exceed 24 hours from the time of delivery.


An Advanced Shipping Notice (ASN) is an important electronic that ensures better inventory management, tracking deliveries and relations between buyers and suppliers. As such, if you are not already receiving them, ask your supplier to start sending them to you before deliveries.

Do you have any questions about Advanced Shipping Notices? Let us know in the comments below and don’t forget to sign up for early access to our Purchase Order Plus software and make receiving, authorizing and sending POs over mobile devices much easier for your team.

How to negotiate with suppliers

How to Negotiate with Suppliers that are Playing Hard to Get

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In many industries and markets, the buyers are at the mercy of suppliers. Let’s say there are only two or even just one supplier in your geographical region or market. That supplier has the power to increase their prices and margin at any time, because they know that you haven little choice but to go along with it. Effectively, they have built a monopoly and are setting the prices.

This can be caused by a number of things, such as:

  • It could be the buyer’s own fault. By forcing prices down, the buyer may have kicked out most of the suppliers out of the market, leaving only a few, which now have more power.
  • Or, it could be the case of “big fish eats small fish” and one or few suppliers simply eliminating their competition.

Still, that doesn’t mean you can’t do something about it. In this post we’ll show you how to negotiate with suppliers that are giving you trouble.

Revise Your Buying Paterns

For this to work, the entire company and its departments must work in unison. This strategy is not an easy one to pull off, and can have long-term consequences.

There are two ways to alter your demand:

  1. Buy less. If you’ve been purchasing from a single supplier for a while now and your purchases have been large, you are setting yourself to be dependent on this supplier and they know it. Sit down with your purchasing and procurement teams and figure out if you really need to buy so much from this supplier. Is there a way to reduce your demand. Or, can you find an alternative product and shift the volume away from your main supplier? Ideally, this new product will have a lower cost.
  2. Solidify your purchasing orders. Perhaps the easiest option and one that is least dicey is to solidify your purchasing orders. One option, if you are purchasing from a large supplier that is driving margins high, is to band with other smaller buyers, that have the same problem and threaten to stop purchasing from that supplier. One less buyer is not something they will likely miss, but 5 or 6 of them should be enough to make them think.

Offer the Supplier New Value

Why not, instead of having a buyer-supplier relationship, which can often be strenuous, you two can have a much more productive, strategic partnership?

You can do this by providing new value to the supplier like this:

  1. Reduce their price risk. The supplier may have a limited capacity of a certain item you are ordering and any increase in your order may raise red alarms from them (and their price with this). What if, instead, you could offer that supplier a long-term contract, for a few concessions? The supplier will likely be happy that they have locked the buyer for a multi-year contract.
  2. Open them doors to new markets. Perhaps the supplier tried to enter a new market, but failed. Maybe your company already has a way in that can show to the supplier. What are few concessions in exchange for a new market opportunity?

Bring in a New Supplier

Changing a supplier, especially one with which you’ve already established a connection, is a tricky endeavor. However, it may sometimes be necessary, if all of the options from above fail you.

The two options you have at your disposal are:

  1. Vertical integration. In case there are no readily available suppliers, in your market or in other markets, you can partner with a company that has some of the assets you are looking for. This is a bit risky as first you have to convince a new company to enter a joint venture (JV) or a strategic partnership with you and second, the supplier needs to see your partnership as a credible threat (they may call your bluff or simply ignore it).
  2. Bring in a supplier from another market. Let’s say your market is controlled by one or two major suppliers. If they are unwilling to lower their prices, perhaps bringing in a new supplier from an adjacent market can make them shake in their boots. Especially if this new supplier comes with innovative methods that the current suppliers are not ready for. Well-entrenched suppliers are often unwilling to change, because why should they? You can use this against them.

If All Else Fails

If none of these tactics work and the supplier won’t budge, the last resort is to suspend your purchase orders from this supplier or threaten litigation. Keep in mind that these options will only work if the supplier needs you more than you need them.

Which option would you choose to negotiate with powerful suppliers and why? Do you know any other way to do this? Let us know in the comments below what you think is the best way how to negotiate with suppliers that are playing hard to get and don’t forget to sign up for Purchase Order Plus early access, which allows you to create, approve and send your purchase orders on any device.

How to identify qualified suppliers

How to Identify Qualified Suppliers and Avoid Those That are Not

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Are you looking to purchase some goods or materials for your company? In that case, you will need a supplier for these. Finding a good supplier is a key part of the procurement process, so if you have not already established a relationship with one (or if you have, but want to change your vendor for some reason), in this post we will discuss how to identify qualified suppliers for your business.

Vetting suppliers that will ensure that you will get your ordered goods on time and for a good price requires answers to some important questions, a lot of research and some strategic thinking on your part, but once you do that, you will probably be set with a supplier for a good time.  This is because, ultimately, you want to find a vendor that you can establish a positive and lucrative business relationship with for a long time.

Here are the steps you need to take to select a supplier that can help your organization:

Do Your Research

If you are procuring an item you haven’t before, or if it’s a service you haven’t had the opportunity to deal with so far, the first thing you need to do is to research the potential suppliers.

There are several ways to do this and the first step is to make a list of five or more suppliers. From here, you can further narrow it down until you find that one vendor that meets your needs.

Here are some of the ways you can do basic research to find suppliers in your area:

  1. Search on Google for suppliers. While this is not something you should rely on, a quick search on Google for suppliers is a good place to start. Once you find some, be sure to visit their websites to find more about them.
  2. Look in trade publications, trade journals, supplier catalogs. This is a step above from a simple Google search as most qualified suppliers will be listed on these.
  3. Browse Yellow Pages. If you need to find a supplier in your city or area, Yellow Pages can be a good resource to do that.
  4. Talk with your colleagues. Finally, you can ask your colleagues and people in your industry if they have a supplier to recommend. Keep in mind, however, that what works for them may not work for you and you will still need to dig a little deeper to see if that supplier has what it takes.

Once you’ve done these (we recommend doing at least two of these steps), you should have a list of several suppliers that meet your broad needs. From here, the next step is to evaluate each of them individually.

Evaluate the Potential Suppliers

In order to reduce the risk of supplier failure, you need to conduct some of these checks:

  • What is their company structure?

Does the supplier have a parent company? This is an important question as you need to know if they or someone else has control over their business objectives, direction, as well as processes and policies.

Do they work in partnership with other companies? Are these companies someone you want your company to be connected with?

  • What are their operational capabilities?

Make a personal visit (or send someone in your name) to the supplier’s sales office, warehouse and manufacturing plant to see first-hand how they conduct their business. Does the place seem well-organized and everybody know what to do or is it chaotic? Even small things like a broken faucet in the toilet can be an indication that something is not right.

  • Ask the supplier for refferences

Interview those that have already worked with the supplier. What do they have to say? Is it positive? Ask what convinced them to work with this particular supplier in the first place. Also, if they no longer work with them, as them to explain to you why.

  • Look how they use their resources

When it comes to using resources, you should evaluate both how the supplier uses the technology and human resources. Do they use the latest technology? What do their employees say? Do they enjoy working here? You don’t want to work with someone who treats their workers poorly.

  • Investigate their financial health

Is the supplier in good financial health? You can use Dun & Bradstreet to evaluate their financial stability (or instability for that matter). This will tell you if you should be working with this supplier long-term or not.


These questions will help you learn how to identify qualified suppliers that you can establish a relationship on the long run. If you have any more questions or comments about finding suppliers, let us know in the comments below the post and don’t forget to sign up for early access to Purchase Order Plus software and to like our Facebook page.

3 crucial things in a supply chain management: time, cost, quality

Why is the Supply Chain Management Important?

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In the age of Internet, online communications and social media, many of the old rules of doing business no longer apply. Companies, if they want to stay relevant in their industry and grab their piece of the market, need to embrace new business processes, especially when it comes to satisfying their customers. One such process that companies shouldn’t neglect is the supply chain management.

What is the Supply Chain Management?

A supply chain is the system a company uses to get products to customers. It includes everything from obtaining raw materials to delivering the final product into the customer’s hands. As you might have guessed, there is a lot that can go wrong in-between these two steps, which is why it’s important for a business to have a superb supply chain management system.

Why? Because, at the end of the day, customers are only concerned with one thing – getting their product and getting it fast. Speed is essential and is what a good SCM needs to address.

But speed isn’t everything. In fact, try to go to fast and you might crash somewhere else. As such, a supply chain management needs to also ensure that speed doesn’t endanger the quality or the price of the product. This is where maximizing efficiency comes into play in the SCM.

Understanding the Importance of Supply Chain Management

What makes the supply chain management important for companies? A couple of things actually:

  1. A way to one-up competition. Lower price isn’t the only way to get an advantage over your industry competitors. A good supply chain management system can also allow your company to deliver the end product faster to the customers, thus gaining their trust over the competition.
  2. Lower operating costs. Delivering a product to the customer can cause quite a few headaches. This is why companies need to use a good SCM that will help them lower operational costs, from production costs, distribution costs and any other related costs in the supply chain. Each of these in the end adds up to the final cost of the product that the customer will have to pay. In addition, a supply chain management also helps delays in production. Any such delay can be costly and a SCM helps avoid them.
  3. Improves the company’s negotiating position. Companies are often “at the mercy” of suppliers and retailers. But with a good supply chain management, they can greatly improve their position at the bargaining table. After all, what supplier doesn’t like working with an efficient business? Prove that you can deliver your products to consumers on schedule and the suppliers ought to look much more favorably on you.
  4. Overall better customer service. In the end, it all boils down to how happy customers are with your service. A good supply chain management can help a long way with this. Most importantly, they will receive the products they ordered on time and in the quality and quantity that they expect. For example, if you order a pizza and you get the wrong one, with the wrong ingredients and the wrong size, would you be satisfied?
  5. Strengthening the company’s financial position. We already explained how costs can pile up during a supply chain. A good SCM can help control, decrease and even eliminate some of these redundant costs. In addition, if your company has a good supply chain manager, who knows his job, he or she can help you decrease overall costs by ensuring a better and more efficient use of assets such as production plants, warehouses or transportation.


A lot can go wrong between making the product and delivering it to the customer. However, a supply chain management can diminish these dangers and allow your company to satisfy the customer needs.

Are you looking for a good purchase order system? Purchase Order Plus is an addon software for mobile Xero that can improve your cash flow, generate reports easier and let you allow access only to those you want. Sign up for early access for POP today.

3-way match

What is a 3-way match? How it can Help You Manage Finances?

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Managing finances and controlling their expenses is, for most companies, one of the hardest task they have to do. Many in fact, despite all the success in other areas such as finding loyal customers, having a great product and so on, fail simply because they were not in full control over their budget. This is why it’s necessary for a company to get a good grip on how it spends his money on procurement and using 3-way match is a practice that’s proven to work time and again.

What is 3-Way Match?

A 3-way match is a payment verification technique that validates that the invoice the supplier sent is genuine and matches the buyer’s purchase order and order/shipping receipt.

So, as you can already surmise, 3-way matching includes three documents that need to, well, match, before the buyer can make a payment for the goods he has received from the seller and pay their invoice.

These documents are:

  1. Invoice
  2. Purchase order
  3. Order receipts or slips

Let’s take a look at what part each of these play in a 3-way match:

  • Invoice

An invoice is a document sent from the supplier to the buyer and is basically a request to for the later to pay for the goods they have received from the former. The invoice must include the same information as the purchase order and if it doesn’t (need to check that), it can’t be valid. Beside this, the invoice also contains its own number, payment schedule, how much is the purchaser due to pay in total and contact information.

  • Purchase Order (PO)

A purchase order is a document sent from the buyer to the vendor in which they confirm an authorize a purchase certain goods, supplies or material and any related terms such as quantity and quality, delivery schedule, shipping address and so on.

  • Order receipts or slips

The final document in the 3-way match is the order receipt or slip. This document proves that both payment and delivery were made.  It contains information on the order shipment and as such, the seller will include it with the goods they are delivering to the buyer.

What are the Reasons to Use a 3-Way Match?

Although it may seem easy to match three documents in theory, in practice it’s not. Very often discrepancies and inconsistencies happen between a PO and invoice, PO and order receipt or between all three. As a result, businesses may end up paying more than what they ordered, invoices remain unpaid even though the vendor has shipped the goods or something else happens.

So the two most important reasons to use a 3-way match are:

  1. It helps business control finances and expenditures better.

By confirming that all three of these documents and their information match 100%, companies can prevent overexpenditure, double payment or simply paying for something they never received.

  1. It builds a better buyer-vendor relationship

In the end, purchasers and vendors need to get along, at least in business. It doesn’t help if there are always problems from one side or the other. A 3-way match almost ensures that there won’t be.


Not controlling if your purchase orders and invoices match is a sure way to lose money and cause some other problems. This is why a 3-way match is of such value for both the buyer and the vendor.

Do you use 3-way match? Let us know in the comments how it works for you. Also, don’t forget to subscribe your email for early access to our Purchase Order Plus software.

what is the procure to pay cycle

What is Procure to Pay Cycle? 14 P2P Cycle Steps Explained

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Last week we talked about procure to pay (P2P). We explained why it is important and useful for accounts professionals to adopt procure to pay systems and how this can help them run their businesses more effectively. We also touched a little on procure to pay cycle and said it consists of the following 14 steps:

  1. Identifying the requirement
  2. Authorizing the purchase order
  3. Approving the purchase order
  4. Procurement
  5. Identifying and vetting the suppliers
  6. Taking quotes from suppliers
  7. Negotiating terms with suppliers
  8. Selecting a supplier
  9. Confirming a purchase order
  10. Sending a shipment notice
  11. Receiving and inspecting the received goods
  12. Recording an invoice
  13. 3-Way match
  14. Paying the supplier for the goods they have delivered.

In this post, we will explain each of these 14 procure to pay cycle steps and what they mean.

Identifying the Requirement

Before a purchase can be made, there has to be a need or requirement for supplies, material or parts needed for the continuation of a business operation. This requirement can be identified by a worker directly on site, who notifies his immediate superior, who then creates and submits a purchase request to the manager.

Authorizing the Purchase Request

There are several factors that can affect and derail the authorization of a purchase request. For instance, it might need a higher level of authorization and be required to be sent to a senior level executive for approval or revision. Also, the purchase request might clash with the company’s or the department’s budget limit and this can cause it to be rejected or returned for revision.

Approving the Purchase Request

However, if all obstacles have been successfully surmounted and it has received an approval from the procurement officer, the request can then proceed to the the next step. In larger organizations this may be an inventory controller. He will look if the company already made similar requests earlier. Once the inventory controller is finished, the purchase request is sent to the procurement department. Keep in mind that in smaller organizations, these two may be the same person.


The next step in the procure to purchase cycle is the procurement itself. There are two ways this step can go.

a) If there were other requests like this one, then the company creates a  Call-Off with an existing supplier the company has a contract with.

b) If there are no similar requests, then the buyer looks for a new supplier.

Identifying and Vetting the Suppliers

There are several ways for a company to find a supplier for the materials it requires. This includes referrals, search databases, Internet search, etc. The buyer needs to carefully consider his options and select a few potential suppliers. The next step is to send each of them a request for proposal (RFP) or a quote.

Taking Quotes from Suppliers

Once the buyer sends out RFPs to potential suppliers, they need to prepare quotes and send them back to him. The buyer then needs to review them. This person will make the changes and send the quote back to the supplier and tell him if he agrees or not.

Negotiating Terms with Suppliers

If the buyer has approved the RFP and quote from the supplier, the two can proceed to negotiate the terms. This will include: payment terms, delivery terms, freight fees, insurance fees, quantity discount, quality and more.

Selecting a Supplier

Once the buyer has concluded negotiations with the potential suppliers and identified one he will do business with, he will award that supplier a contract and send him a purchase order (PO) for the items.

Confirming the Purchase Order

After the supplier receives the purchase order, he needs to send a confirmation to the buyer. The buyer then keeps this confirmation for future reference in his records. Earlier this was done on paper, with both the buyer and the supplier having several copies (for each department involved), but today all of this can be done via specialized software or email.

Sending a Shipment Notice

Following the confirmation of the PO, the supplier needs to send a shipment notice to the buyer, notifying them that the goods are on their way. This notice will typically include the shipment date, delivery location address, PO number, description of goods (number of packages, their weight…) and the name of the transporter, among other things.

Receiving and Inspecting the Goods

Once the buyer has received the goods, he will have to inspect it thoroughly to see if it matches the terms agreed with the vendor. At this stage, the buyer needs to check the condition and quantity of the items. The delivery staff will also compare the PO number to the one from the request and confirm the receipt.

Recording an Invoice

If the buyer has acknowledged that he has received the goods and has no complaints (he didn’t send anything back), the supplier will send him an invoice for payment. The invoice will contain the payment date, how much the buyer is to pay, PO number and other payment terms.

3-Way Match

The purchase order, invoice and any delivery documents need to go through revision and checking by the accounts payable department of the company to see if everything matches.

Paying the Supplier

This is the final step in the procure to pay cycle. If everything is okay and the invoice matches the purchase order and the delivery documents, the buyer issues a payment to the supplier according the the payment terms they’ve agreed upon.


And that is how the procure to pay cycle works! All 14 steps of the P2P cycle explained.

What do you think about the procure to pay cycle? Are you using it? Let us know in the comments below the post and don’t forget to sign up for early access to Purchase Order Plus and join our launch list today!

What is procure to pay

What is Procure to Pay? Why Does Your Business Need P2P?

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No one can say that the life of an accounts payable professional is an easy one. Balancing dozens, sometimes hundreds of different purchase orders and making sure they don’t mess anything up is a stressful job, but necessary if the company wants to keep its customers and shareholders happy and satisfied they are doing business with it.

Of course, the processing and PO systems are often wide apart. Sometimes sections of it are not even in the same building or even country. They could be on different continents.

To mitigate this problem, accounts payable professionals are using procure to pay systems to bring the accounts payable process and the supply management together. By doing this, you can ensure not only that your business runs more efficiently, but also the satisfaction from your shareholders and customers.

So what exactly is procure to pay? Why is it so important for your business to adopt it?

Procure to pay, or P2P, is a system of acquiring and managing raw materials that a company requires to manufacture its products or provide services. and of course, paying for these raw materials.

The procure to pay is am entire process. We’ll not get into the details of it here, but here are the basic steps that a P2P normally involves:

  1. Identifying the requirement
  2. Authorizing the purchase order
  3. Approving the purchase order
  4. Procurement
  5. Identifying and vetting the suppliers
  6. Taking quotes from suppliers
  7. Negotiating terms (payment, delivery schedule, etc) with suppliers
  8. Selecting a supplier
  9. Confirming a purchase order
  10. Sending a shipment notice
  11. Receiving and inspecting the received goods
  12. Recording an invoice
  13. 3-Way Match
  14. Paying the Supplier for the goods they have delivered

As you can see, there are quite a few steps (14 to be exact) in the procure to pay cycle, so we’ll leave their details for another time right now.

Why You Want to Automate Your Procure to Pay System?

What we want to bring your attention to is why you don’t want to do procure to pay manually or why you should stop doing things like that and switch to automated P2Ps.

Procurement can involve a ton of paperwork, invoices, purchase orders, emails, shipping notices. Keeping track of all that, ensuring that everything is in perfect order and that, finally, payments are made on time is a task that often requires a lot of time, money and an army of employees to make it happen.

And still, there’s a high chance that you could do something wrong. This is why it’s much better to simply make your procurement to pay system automated and make it faster, easier to follow, less expensive and, above all, more efficient.

The Biggest Benefit of Procure to Pay

But what are the benefits of procure to pay?

Well, for one, and this is probably the one most businesses are the most interested in, is that it will save you time, money and resources (including human ones, of course). Yes, it costs all of these to initiate it, which is why many organizations might be reluctant, but the advantages far outweigh the disadvantages. As a mater of fact, your question shouldn’t be “how can we afford P2P?” but rather “how can we not afford it?”


A lot can go wrong in procurement. Which is why you need to take every step necessary to keep things from falling apart and ensure that your organization goes through this process safe and sound every time they are procuring material and resources for its products and services. A good, automated procure to pay system is how you do it.

Do you have any question about procure to pay? Let us know in the comments below the post what you think and don’t forget to sign up for early access for Purchase Order Plus and receive updates about POP software.

what types of purchase orders do you need

What Different Types of Purchase Orders can You Use?

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A purchase order (PO) is a document that a buyer sends to the supplier together with an order request for the supplies, material or equipment his business needs. Once the the seller accepts it, the PO becomes a legally binding document for the two parties. If the buyer declines to pay the PO and has received the goods, the purchase order will protect the seller.

However, not all purchase orders are the same. Since companies have different requirements when procuring from their vendors, there are different types of purchase orders they can use.

There are four types of purchase orders:

  1. Standard PO
  2. Planned PO
  3. Contract PO
  4. Blanked PO

Each of these will be used by an organization depending on specific circumstances and needs, and especially its knowledge of details such as item quantity needed, price, payment terms, delivery schedule and so on.

In the following article, I will explain each of these four types of purchase orders and how they work.

Standard Purchase Order

Standard POs are the most common types of purchase orders. Here, the buyer already knows exactly what type of item does he need, its quantity, how much it costs, has agreed with the vendor about the payment terms and when it should be delivered.

For example, after analyzing its inventory and supplies, company X determines that it needs new toner cartridges for its  printers. In addition, company X also knows the amount and type of the cartridges it needs (all of its printers are of the same type). Finally, the price, payment terms and delivery schedule are also known. With that knowledge, company X creates a standard PO and it sends it to the seller (for example Hewlett-Packard) for acceptance.

Planned Purchase Order

A planned PO is used when the business knows the item, its quantity and price and the payment terms. What is not known, however, is the delivery date. In such case, the buyer only provides an approximate date to the seller (for example “between 1st and 15th in the month”).

For example, company X knows that it needs toner cartridges and, based on how much printers it has and how often they are used, it estimates that it will need 15,000 toner cartridges per year in the next 6 years. Based on this, instead of sending a standard PO every time it needs new cartridges, company X will send a planned PO to the vendor.

Contract Purchase Orders

In case the buyer doesn’t know or can’t anticipate the specific details about its order such as the item, quantity, price, delivery, etc. he will create a contract purchase order for a certain period of time, most often for a year.

For example, company X requires new cartridges for its printers. However, since it has different types of printers, laser and ink, it also needs different types of cartridges (toner and ink-jet). In addition, since the printers are used at different times and not always on the same quantity of paper (sometimes just one page, other times a sheet), company X will need cartridges at different times as well. If this is the case, it creates a contract purchase order.

Blanket Purchase Order

If you know what item you need, but not how much or when it needs to be delivered, you can create a blanket purchase order.

For example, company X requires 5,000 toner cartridges per year, but doesn’t know how much it needs per delivery or when the delivery dates should be. In this case, company X creates a blanket purchase order.


Knowing what types of purchase orders to use and when will help your business run much more effectively. Therefore, before creating a PO, be sure to analyze your inventory to determine the item, quantity, price, delivery schedule and as much as possible about the order.

Looking to create purchase orders on mobile with ease? Sign up for early access to Purchase Order Plus.