There are a number of PO systems available. Here is a quick guide to help you choose:
1. Paper Based Systems
The traditional method of creating POs is with a paper based form. This type of systems usually has the following transactions:
Paper based systems have the advantage that they are cheap to implement and are well understood, However, there are a number of reason whey the use of paper forms has become obsolete.
– More fraud
Using paper based systems can lead to more fraud within the company. It is impossible for the finance department of a bigger company to check each PO with the relevant approver for authenticity. This means that any staff member can make up an order, sign it as the approver and submit it. Fraud therefore is a big disadvantage of using paper based systems.
– Lost paper
Moving paper forms throughout the office or on a global scale is error prone and costly. A lost PO might lead to lost productivity, a doubling of workload and project deadline overruns. This problem becomes compounded when the finance department are not in the same country of the person who is dealing with the supplier.
2. Computer Based Systems
It is usually recommended that a separate electronic purchase order system be used. There are several questions that always get asked when this recommendation is given.
Why don’t we use our current accounting software, that has a purchase order system built into it?
Do you really want to give access to your accounting system to all of your staff members? Most of the security for SME accounting packages is woefully inadequate, so a separate system is the only answer to stop staff seeing balance sheets and profit and loss accounts.
Can’t we just use a spreadsheet software package like Microsoft Excel?
Yes, you can. The author has seen several well put together Microsoft Excel spreadsheets that capture POs. However, it’s all to easy to get stuck in ‘Excel Hell’ This might mean having to update several sheets with the same data across different workbooks. Having to produce a monthly report by manipulating the sheet each month can also take hours of work.
As the founder of Procurementexpress.com, the author is going to, of course, recommend Procurementexpress.com as the system of choice for creating the best simple PO system available for the small and medium business market.
For a practical guide to setting up a purchase order system, download our free ebook here.