For finance teams, having an efficient purchase order approvals process is critical in maintaining effective procurement processes. They help to ensure that purchases are made in line with budget constraints and that suppliers are paid fairly and on time. Below we'll explore the benefits of purchase order approvals and how they can help finance teams streamline their processes and overall achieve greater success.
Budget Control
The main reason an organisation would choose to bring in purchase order approvals is that it helps them stick to their budgets. As we know, in many companies there are strict spending limits for each department or team, and any purchases that exceed those limits must be approved by a higher authority. Without a proper approval process, it can be easy for employees to make purchases that exceed their budget. With PO approvals in place, however, employees must get approval for any purchases above a certain amount. Having the option for higher-ups to reject a PO before the money is spent helps to ensure that budgets are adhered to.
Fraud & Unauthorised Spend Prevention
Another benefit of purchase order approvals is that they help to prevent fraud and unauthorised purchases. Without a proper approval process in place, it can be difficult to ensure that purchases are being made by authorised individuals and that suppliers are being paid for their services. By adhering to a set process, companies can verify that all purchases are being made by authorised individuals and that the suppliers providing the goods or services are legitimate.
More Time To Do What Really Matters
Purchase order approvals also help to streamline the procurement process by reducing the time it takes to handle invoices and payments. When purchase orders are approved in advance, it becomes much quicker to process invoices, as the approval has already taken place. This can massively speed up the payment process, allowing you to better allocate your valuable time.
Improved Accuracy
By requiring approvals upfront, you can ensure that invoices are accurate and that payments are made in accordance with established budgets. This helps reduce the risk of errors or discrepancies in financial records and ultimately improves the accuracy of financial reporting.
Be more efficient
Bringing in a PO system can mean you gain valuable insight into spending patterns. By reviewing purchase orders before committing to the spend, you can gain a better understanding of how resources are being allocated and easily identify areas where costs can be cut. This can help to improve overall financial performance and ensure efficiency throughout the company.
Purchase order approvals are a critical to having an effective procurement process. The benefits are endless, from helping your team stick to budgets, to preventing fraud, and overall streamlining your financial operations. There’s no denying that by bringing them onboard, companies can achieve overall greater success and meet their full financial potential.
