What is Purchase Order Software?
Purchase orders are critical documents that signify the start of the purchase process by a business in order to acquire goods or services.
In order to complete any particular purchasing process, the purchase order associated must be processed and closed.
This process which needs to be completed to complete the purchase and close the PO is cumbersome. Businesses often face issues such as –
- manual processes which are costly and inefficient
- cause delays
- errors
- difficult to scale with business ops
- difficulty in exercising spend control
- breaches in expense policy
- slow approval processes
- maintaining spend visibility is hard
- non-existent or outdated analytics
- poor supplier performance management
- inaccurate budgeting
Purchase order (PO) software is designed to automate and streamline the creation, tracking, processing and management of purchase orders.
By digitizing the entire purchasing process, businesses can significantly iron out the issues listed above.
How Purchase Order Software Works
Let’s look at an example of how the introduction of a purchase order software like Nanonets streamlines the workflow.
1. Purchase Request:
An employee uses the Nanonets portal to submit a purchase request electronically.
2. Purchase Order Creation:
Nanonets automatically generates a PO based on the request details.
3. Purchase Order Approval:
The PO is routed through an automated approval workflow within Nanonets.
You can set predefined rules and conditional checks to maintains consistency across all procurement activities, minimizing errors and preventing unauthorized spending.
Approvals notifications are sent and can be easily handled within popular communication tools like Slack and Microsoft Teams.
These approvals include direct Call To Actions (CTAs), simplifying the process and facilitating swift decision-making.
4. Purchase Order Dispatch:
Once approved, the system automatically sends the PO to the supplier via integrated email or supplier portal (e.g., SAP Ariba, Coupa).
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5. Goods or Services Delivery:
The supplier processes the order and updates the delivery status in the supplier portal, which is synced with Nanonets.
6. Invoice Data Capture and Matching:
Nanonets extracts data from invoices, purchase orders, and delivery notes automatically, minimizing manual entry and errors.
Automated three-way matching ensures accuracy by automatically matching invoices, purchase orders, and delivery notes before processing payments.
7. Payment Processing:
Nanonets facilitates seamless payment processes, ensuring that all transactions are completed efficiently and on time. This helps in maintaining good relationships with suppliers and avoiding late payment penalties.
8. Integration with ERP/Accounting Software:
Nanonets integrates with various ERP and accounting systems for a unified procurement and financial data management experience.
By automating the purchase order workflow with a PO software like Nanonets, businesses can ensure seamless data flow across various applications, reduce manual errors, and enhance overall efficiency.
Do small businesses need Purchase Order Software?
Larger companies definititely need a complete PO software setup to manage the procurement process. Multiple purchasing transactions involving a large number of employees necessitates complete monitoring and tracking of the entire process.
On the other hand, small businesses often operate with limited resources and may question the necessity of using a purchase order (PO) software. However, there are several compelling reasons why even small businesses can benefit significantly from a PO system:
- Improved Financial Control: A PO system helps small businesses keep track of their spending, ensuring that they stay within budget. By documenting every purchase, businesses can easily monitor expenses and identify any unnecessary spending.
- Streamlined Purchasing Process: With a PO system in place, the purchasing process becomes more structured and efficient. It helps in maintaining a clear record of what was ordered, when, and from whom. This reduces the risk of errors, such as duplicate orders or incorrect quantities.
- Enhanced Vendor Relationships: Using a PO system can improve relationships with suppliers by providing clear, formal documentation of orders. This ensures that both parties have a mutual understanding of the terms and quantities agreed upon, reducing the chances of disputes.
- Better Inventory Management: A PO system assists in tracking incoming inventory, ensuring that stock levels are adequately maintained. This prevents overstocking or stockouts, which can be particularly detrimental to small businesses with tight cash flows.
- Compliance and Audit Trail: Small businesses are often subject to audits and regulatory requirements. A PO system provides a thorough documentation trail, making it easier to comply with legal and financial regulations. This transparency can be crucial during audits, providing clear evidence of financial transactions.
- Cost Savings: While there is an initial investment in setting up a PO system, the long-term savings can be substantial. By avoiding over-ordering, negotiating better terms with suppliers, and reducing administrative overhead, small businesses can achieve significant cost efficiencies.
- Scalability and Growth: As a small business grows, its purchasing needs become more complex. A PO system can scale with the business, providing the necessary infrastructure to handle increased order volumes and more intricate supply chains.
Many PO software like Nanonets are now offered as Software as a Service (SaaS) with subscription-based pricing. This means small businesses can access sophisticated software without the need for a large upfront investment. Flexible pricing plans allow businesses to pay only for the features they need.
In conclusion, while the upfront effort of implementing a PO system might seem daunting for small businesses, the benefits it provides in terms of financial control, efficiency, and scalability make it a valuable investment.
Using a PO software can help small businesses streamline operations, reduce costs, and set a solid foundation for future growth.
6 Best Purchase Order Software in 2024
Here are six of the best purchase order software solutions for 2024, along with their pros and cons based on our research.
1. Nanonets
Nanonets is a top-notch procure-to-pay (P2P) automation software that stands out for its advanced features, user-friendly interface, and cost-effectiveness.
Pros:
- Easy to Use: The interface is a breeze to navigate, reducing the learning curve for new users.
- Accurate Data Capture: It excels at capturing data from invoices, purchase orders, and delivery notes with great precision.
- Actionable Approvals: Approvals can be done directly within popular communication tools like Slack, Teams, and email, making them easy to act on with direct CTAs (Call To Actions).
- ERP Integration: It seamlessly integrates with ERP systems, ensuring fully automated accounts payable processes.
- Cost-Effective: It’s significantly more affordable for small to medium-sized businesses compared to its competitors.
- Validation and Approval Rules: It enforces pre-set validation rules and approval routing to maintain compliance and efficiency.
Cons:
- Does not support inventory control, RFP, and bid processes.
- Advanced features may require extensive training for effective use.
2. Coupa Procurement
Coupa Procurement is highly regarded for its robust procurement management capabilities, making it ideal for enterprises seeking enhanced performance and control over their procurement processes.
Pros:
Real-Time Budget Management: It provides real-time tracking of budgets and spending.
AI and Machine Learning Integration: It enhances error and fraud detection.
Comprehensive Suite: It includes tools for contract and supplier management, inventory control, and e-invoicing.
Cons:
Cost: It can be expensive for smaller businesses.
Complexity: Advanced features may require extensive training for effective use.
3. SAP Ariba
SAP Ariba is an excellent choice for large enterprises in need of comprehensive procurement and spend management solutions with strong integration capabilities.
Pros:
Integration with SAP S/4HANA: It seamlessly integrates with other SAP modules for a unified experience.
Automated Supplier Management: It automates supplier onboarding and performance management.
Real-Time Data Synchronization: It keeps catalogs and supplier data updated in real-time.
Cons:
Implementation Cost and Time: It requires a significant investment and time to implement.
Complexity: It may be too complex for small to medium-sized businesses.
4. Procurify
Procurify is well-suited for small to medium-sized businesses looking for an easy-to-use and flexible P2P solution with limited features.
Pros:
Ease of Use: Intuitive interface makes it easy for users to adopt.
Flexible Integrations: Integrates with popular accounting systems like QuickBooks, Sage Intacct, and Microsoft Dynamics 365.
Real-Time Spending Insights: Offers real-time insights into spending, enhancing budget control.
Cons:
Scalability: May not scale as well for very large enterprises.
Limited Advanced Features: Lacks some of the advanced features offered by more complex systems.
5. Rossum
Rossum’s AI-driven platform is designed to automate the processing of transactional documents, making it a powerful tool for organizations looking to streamline their P2P processes.
Pros:
Advanced AI and Machine Learning: It utilizes AI for document processing, reducing manual tasks and errors.
Customizable Workflows: It allows for the creation of tailored approval workflows.
Integration Capabilities: It easily integrates with ERP systems like SAP, Coupa, and Workday.
Cons:
High Initial Setup Effort: It requires significant initial setup and training.
Cost: It can be expensive, especially for smaller organizations.
6. Oracle Fusion Cloud Procurement
Oracle Fusion Cloud Procurement offers a robust solution for large businesses aiming to streamline and automate their procurement processes.
Pros:
Comprehensive Features: It offers extensive functionalities, including supplier relationship management, contract management, and automated invoice processing.
Scalable: It is suitable for large enterprises with complex procurement needs.
Reduces Fraud Risk: Its strong approval processes and data matching reduce the risk of fraud.
Cons:
Complex Setup: It requires extensive setup and ongoing
Not Suitable for SMEs: Best suited for larger organizations due to its complexity and cost.
Conclusion
When it comes to picking the right purchase order software, there are a few factors to consider – the size of your organization, the complexity of your procurement needs, and your budget.
If you’re running a small to medium-sized business, Nanonets is the top choice. It offers advanced automation capabilities, seamless approval workflows, and deep integrations that’ll make your life easier.
For very large enterprises with extensive procurement needs, Coupa and SAP Ariba are both excellent options. They provide supplier relationship management, inventory management, and more, giving you all the tools you need to stay on top of things.
Remember, it’s important to evaluate these options based on your specific requirements to find the best fit for your organization.
