A purchase order survival guide could be the answer to your business needs. Use it as a manual to steer your business off from crashing like Circuit City.
Remember how we watched in horror as this electronic retailer teetered on like a drunk? For some time, business analysts thought there was hope. However, they later unanimously agreed that it was over for Circuit City.
When did Circuit City’s problems begin?
The problems began when the company started laying off experienced employees and replacing them with less experienced ones. Their problems ranged from inventory management, providing quality customer service and cashflow management, etc. Barely two years after making this uncalculated move, their stores closed down, one by one.
If this can happen to a well-established business like Circuit City, imagine what would happen to a startup!
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The purchase order survival guide
A few months ago we published a detailed blog that defines purchase orders; I urge you to read it here. Once you are done you can resume reading this purchase order survival guide.
Are you back? Welcome back! Let’s continue…
Ted started a promising construction business in Abilene, Texas. He thought it would do his father proud if he followed in his footsteps. Ted’s father was a renowned property developer, and when he retired there was no one to take over his company, as Ted was only 12, so he sold the company.
When Ted started his construction company everyone applauded him, including his retired father. Ted’s construction company was responsible for building low-cost houses.
Everyone thought Ted had something going on; that his business was the force to be reckoned with, a front runner, and so on. Unfortunately, things went terribly wrong when Ted’s company landed three major projects at the same time.
Ted struggled to manage all three construction sites because his company was using paper-based systems. Because he trusted his employees, he allowed them to send purchase orders without following any approval processes.
Employees started ordering expensive building materials, his accountant stole some of his company’s money and creditors closed in on him. Ted tried borrowing money, but no bank was willing to borrow his company the millions he needed. That was the end of a promising business.
I think today if you ask Ted what happened to his business, he would say, “I don’t know exactly what happened to my business but if there was a tool that alerted me every time purchase orders were created, my business would still be around.” The good news is that such a tool exists! I am sure you don’t want your company to go up in smoke like Ted’s!
Survival guide’s rule # 1: Keep an eye on your bank account
You may be tempted to believe that chasing sales and closing deals are your only baby. And that reconciling bank accounts, preparing budgets and approving purchases are only for your accounting officer. After all, you have no reason not to trust him – he’s been an accountant for years.
What you don’t think of, is…
Behind your back, your accountant can negotiate with suppliers for 60 days payments instead of 30 days. And when he is sure that you don’t suspect anything, he can transfer money to his friend’s account.
It’ll be hard for you to pick this up without the assistance of an efficient software but it is preventable. You can prevent this type of fraud by adopting the most efficient purchase order software out there – Procurementexpress.com.
Survival guide’s rule # 2: Keep your customers happy
Walt Disney said it best when he said, “Do what you do so well that they will want to see it again and bring their friends.” Why? Because there’s no great brand ambassador like a happy customer!
Once you find your way into the customer’s hearts, they’ll reward you with their loyalty. However, you can’t secure such loyalty without:
- Keeping your business affairs transparent,
- Being realistic and never over promise,
- Keeping the communications lines open, and
- Offering quality customer service all the time.
Thanks to technology, customers can now receive orders faster than before. Using an automated purchase software, your supplier can deliver faster, which means no more delays. Your customers will find your business reliable!
Survival guide’s rule# 3: Insist on contracts and purchase orders
For each product or service bought there should be some form of agreement. Something you can use as proof whenever you want to return goods to your supplier, to reimburse customers or file a lawsuit.
Because creating contracts for each and every product will take hours, a way around it could be using a purchase order software. Something less clunky, easy to use and affordable.
Survival guide’s rule #4: Manage your cashflow
I have a notion that Circuit City didn’t have a survival guide similar to the one you’re reading now. Otherwise, the company wouldn’t have had a problem managing inventory and cashflow. Making regular purchases without using any purchase management tool only exacerbates cashflow problems.
Your suppliers, employees, and landlord all expect their payments on time. All future payments that you expect from your customers don’t mean anything to them. They expect you to honor the agreement of paying them every month.
One clever way of managing your company’s cashflow effectively is by using an efficient purchase order software. A purchase order software such as Procurementexpress.com helps companies with a large/medium client base to avoid:
- Late payments,
- Exceeding budget limits,
- Wasting investors money, and
- Duplicating purchase orders.
No matter what the size of your company’s budget is, Procurementexpress.com will allow you to cut costs and increase profitability. Plus, processing purchase orders using Procurementexpress.com is like a walk in the park! Even technophobes enjoy using it.
What are you waiting for? Sign up for a free trial today!
Alternatively, you can simply bookmark the Procurementexpress.com blog and use it as your trusted procurement bible.