Posted in Financial Process Automation

How to create a purchase order process that meets real business requirements

Purchase order and invoice processing are basic functions every organization performs as part of its day-to-day operations. Employees in the finance department handle POs, get them signed, send them out to vendors and process related invoices on a routine basis.

These processes can often have complex business requirements:

  • The form itself requires a significant amount of data entry such as part numbers, prices, calculated fields like subtotals and totals etc.
  • The routing through the organization is often dynamic e.g. if the amount exceeds $5,000, an additional level of approval is required.
  • POs usually require multiple signatures.
  • Users may need to attach documents.
  • Approval delays can be extremely costly e.g. if they cause a delay in a product rollout.

It’s important to make them as smooth and efficient as possible. Unfortunately, in many cases, these core processes are manual. Employees must deal with workarounds, waste time fixing errors and delay potentially time-sensitive purchases that impact project deadlines.

There’s a better way using fully electronic automated processes. The ROI is enormous. Happier employees are more productive. Mistake-free POs lead to faster purchasing. Powerful new technologies like machine learning are now available to analyze digital data. Reduced printing burnishes your green credentials.

The good news – it’s easy to automate these and other everyday processes using modern, visual tools. You don’t need massive investments of time and money in expensive software or programmers.

Read on to learn more.

First, what exactly is a purchase order?

Procurement process

Purchasing is a component of the procurement process in every organization. Procurement is an overarching term for the complete set of activities that the organization performs to obtain goods and services it needs to operate.

It’s a strategic set of activities designed to maximize purchasing’s value. In recent years, procurement’s priorities have also changed to align better with corporate priorities.

Purchasing is the transactional component – the actual act of buying. In many organizations, purchasing starts with a purchase requisition. Employees create this internal document and route it within the organization to secure the necessary approvals for making the purchase.

In contrast, Finance produces a purchase order (PO), which is an external document. Finance sends the PO to the vendor to formally place an order.

While similar, purchase orders and purchase requisitions are different.

What does a real-world PO process look like?

A purchase order form can be quite complex. In addition to information about the requesting employee and the vendor, it contains line items for each ordered item , item codes if applicable, unit price, quantity and subtotals. Of course, it contains a grand total, discounts if any, taxes, as well as shipping and delivery terms. It’s very common for purchase order forms to have lengthy instructions indicating which approvals are necessary. In many cases, the actual approval chain varies depending on who is buying what.

The purchase order process is the end-to-end journey of making the purchase and paying for it. The exact steps will vary, of course, from one organization to the next.

A typical purchase order process might have the following steps:

Typical purchase order process
  1. An employee creates a purchase requisition. The employee fills it in and sends it to their manager for signature.
  2. The manager reviews the requisition and approves it.
  3. A VP must review and sign if the amount exceeds a certain $ threshold.
  4. Finally, the Finance Department produces a purchase order using the approved purchase requisition.
  5. Finance sends the PO to the vendor (external to the company).
  6. The vendor ships the ordered items and sends one or more invoices.
  7. Each invoice kicks off an internal invoice approval process that correlates deliveries, invoices and the purchase order.
  8. When approved, Finance pays the invoice.
  9. Finally, someone files the documents away for record keeping.  

Why automate purchase order processes?

Compare the differences in the above process using Excel and email vs online forms and an electronic workflow.

Manual process with Excel and emailElectronic form and process
Unnecessary data entry e.g. employee name, email, phone etc.Reduced data entry since these fields are filled in automatically.
Calculations are performed automatically in Excel but not if you’re using paper or PDF.Fully automated calculations.
There’s no way to hide irrelevant sections and only show them as required.Electronic forms can show/hide sections for dynamic behavior. As a result, they’re easier to use.
Routing for signatures and approval is a manual, email based process. Employees must jump through hoops to figure out where the purchase order is stalled.The system automatically routes to the right person at the right time for approvals. Employees don’t need to think about it, follow instructions or make mistakes. They can also see where the process is at any instant.
Since signatures are not electronic, the document must be printed – that’s a waste of paper and bad for the environment.E-signatures eliminate paper. Mobile support means managers can approve anytime and from anywhere.
Excel sheets and paper forms cannot be integrated with business systems like an inventory database. That means more data entry since information cannot be auto-filled from SQL.With SQL and business system integration, e-forms and workflows can pull data from these back end systems thus reducing unneeded data entry.
Errors and omissions are a fact of life. Employees must go back and forth correcting mistakes – more wasted time and delays.Errors and omissions are greatly reduced. That means less wasted time and faster approvals.
Business data is locked up in SharePoint repositories and filing cabinets. There’s no way to analyze it.Business data is electronic and is generated automatically. You can use new technologies like machine learning (ML) to analyze it in real-time to generate actionable business insights.

Steps to create a PO that meets real business requirements.

Fortunately, automating your PO process is no longer out of reach even for the smallest businesses. It’s easy with a modern platform like frevvo. Let’s take a look at some of the key aspects.

1. Start with a pre-built template

Purchase Order and other procurement related templates.

In all likelihood, you won’t have to start from scratch. frevvo provides several pre-created purchase order forms and workflow templates. They’re easy to preview and showcase a variety of functionality.

Once you find a template you like, simply install it with a single click. You can then customize the template.

2. Drag & drop to create or customize forms

Drag & Drop to design forms.

Forms are the building blocks of every Purchase Order workflow. frevvo’s visual form designer is so easy to use that business users can design PO forms with ease.

  • Select from a rich control palette:
    • Text, Checkbox, Radio etc.
    • Date, Phone, Email etc. with built-in validation.
    • Grouping controls like collapsible Sections, Tabs, Tables etc.
    • Attachment, Signature, Image, Button and others.
  • Drag & drop to arrange controls and easily create complex layouts e.g. multiple columns.
  • Customize labels, help text, placeholders, decorators for a pleasing appearance while providing context-sensitive help.
  • Use a Table to capture line items – rows can be added or removed easily.
  • Use dynamic drop downs for part numbers etc.
  • Set up digital signatures with ease.
  • Use an Upload control to allow users to attach supporting documentation.
  • Create individual Approval sections for each stakeholder e.g. Manager, VP etc. We’ll see how to show/hide them dynamically at the right step in the next section.

3. Use the Visual Rule Builder for dynamic behavior

Sample Visual Rule fills in the date automatically.

Dynamic behavior – the ability to show/hide fields at the right time or make a field required vs optional, perform calculations, and route to the right person at the right time – is a must-have business requirement in the real world.

Instead of creating detailed instructions in Excel or relying on people to just know what to do, you can harness the power of visual rules. You don’t have to be a JavaScript coder. Our Visual Rule Builder takes care of the details for you.

A typical purchase order, say one that routes from Employee to Manager to VP (conditionally) to Finance would likely have numerous examples of dynamic behavior:

  • Show/Hide approval sections on the correct step e.g. on Employee step, hide the Manager, VP and Finance sections.
  • Automatically populate first name, last name, email address etc. for the employee requesting the purchase.
  • Fill in the date when the user signs without requiring any typing.
  • Calculate subtotals, taxes, discounts, grand total etc.

Learn more about how to visually create dynamic forms along with detailed examples by reading this article: Visual Rules for Dynamic Forms.

4. Define Workflow Routing visually

Purchase Order workflow defined visually.

It’s very easy to define the routing itself. Simply drag & drop in frevvo’s visual workflow designer to specify the sequence of steps. The graphical representation looks like a flowchart and is familiar to people.

frevvo also provides wizards to configure the settings for each individual step. You can specify assignment (to a particular user, a role or an anonymous email address), messages to be displayed, notifications to be sent etc.

One of the most important settings is Preconditions. Use these to perform steps only under certain conditions e.g. skip the VP Approval step unless Grand Total exceeds $10,000. To specify a precondition, simply navigate to the tab in the wizard above, and click a button to launch the same Visual Rule Builder as before – the only difference is that you only specify a condition and not actions. It’s easy and intuitive. When you’re done, the precondition will display in the workflow as a yellow box and you can provide a user-friendly description.

Read more: Everything you need to know about workflows with real world examples.

5. Connect to your SQL database

frevvo forms and workflows integrate with SQL databases

Business processes are simply more useful if they can access information from SQL databases on demand and a purchase order is no different. Using frevvo’s Database Connector, you can easily create powerful dynamic forms and workflows that perform sophisticated integration with your database.

The steps are straight forward:

  • Configure the Database Connector using SQL or Stored Procedures.
  • Generate form controls from the configured queries (no programming).
  • Drag and drop in the Form/Flow designers to rearrange controls.
  • Connect forms/workflows to queries using URLs exported by the Database Connector.

There are many ways to integrate your forms/flows with your database. You can create  dynamic dependent pick lists, master-detail views, create and update records in SQL and run stored procedures.

Read more: How to easily create dynamic database forms.

6. Use existing authentication systems

Authenticate to frevvo using existing systems such as Active Directory.

Purchase orders are part of the overall procurement process in the company. These processes contain sensitive and important financial data and it’s important to prevent unauthorized access.

With frevvo, users don’t have to remember yet another password or security mechanism. Many frevvo customers integrate to their existing authentication and authorization systems such as Active Directory or other LDAP system. The integration is sophisticated in the sense that it delegates authentication to the existing system but also pulls user and role information from the same system for authorization purposes. frevvo also supports Single Sign On, integrates with SAML providers such as Shibboleth, Okta etc., works with Microsoft Azure Active Directory, as well as IIS for On-Premise customers.

7. Generate PDF documents as required

PDF purchase order document.

Many internal business processes must generate PDFs. While the most common use cases are HR-related e.g. employee onboarding generates a Federal W-4 and I-9, it’s not unusual to generate PDF documents. For example, they are easy to upload to a document management system for storage and retrieval.

Some customers route the purchase order electronically to the vendor as part of their frevvo workflow and require the vendor to sign electronically. There are advantages to doing this since the vendor’s signature can make the PO a legally binding document.

However, it’s also extremely common to generate a custom PDF purchase order and, fortunately, with frevvo you can do either.

  • The workflow can route instantly to the Finance department to for review but staff no longer has to waste time manually typing information to create the Purchase Order PDF.
  • frevvo’s drag and drop PDF mappers make it possible to generate your exact PDF document using data from the workflow. Alternatively, frevvo can also automatically generate a PDF that looks like the e-form. Some level of customization is possible e.g. headers, footers, page numbers etc.
  • The PO workflow automatically emails the PDF purchase order to the vendor.

8. Save documents & data electronically

It’s important to save completed purchase orders electronically. You may need to retrieve them later for auditing or for data analysis. frevvo provides many options that let you store PDFs, XML data, signatures, attachments and everything necessary to save, index and find your data at a later date. You can:

Connectors are available for all of these options and in most cases, you simply use point-and-click wizards to connect your forms/flows to them.

Conclusion

Purchase Orders [and Purchase Requisitions, Invoice Approvals, Vendor Management] workflows are essential components of the overall procurement process at any organization. In a world where the pace of business is accelerating relentlessly, it’s critical to ensure that these everyday operations run smoothly.

You need to stop relying on Excel and email for these important everyday activities otherwise you’re just wasting employees’ time that can be spent on more productive tasks.

frevvo’s modern platform and world-class team offer a compelling alternative with powerful yet easy to use capabilities that meet real-world business needs.

Automate your procurement processes easily.

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