Purchase Order (PO) System for QuickBooks
QuickBooks PO (Purchase order) module provides a very easy and straightforward method for companies to produce purchase orders Finance departments can very quickly track the working capital needs to satisfy business obligations. If you should be relying only on vendor invoices then chances are you won’t know the cash flow needs through to the vendor invoice turns up and that may cause uncertainty for a number of people.
There clearly was one challenge though – to utilize QBO to buy orders you must manually enter every purchase order and therefore could be a bottleneck for Accounting and finance teams.
In this web site post, we are going to cover the fundamental purchase order process in QuickBooks Online but we shall also cover how to make the method better by leveraging Create Purchase Orders In QuickBooks tool that actually works with QuickBooks Online or Desktop (a.k.a QuickBooks Enterprise)
But first, let’s have a look at some data about QuickBooks online a.k.a QBO.
Quickbooks online is a widely adopted Product and now have a huge number of customers. As per number from Intuit – the organization behind QuickBooks, they have over 2.2 million customers using Intuit Quickbooks online.
The product is being used over 193 countries & most for the customers are generally small enterprises or single owners.
However, you will be surprised when you have a look at some of those small businesses have a large number of employees.
For example, in the data below from idatalabs.com, almost 40% (total sample size of 3,482 customers) of companies do have more than 50 employees.
Quickbooks customer base
And around 11% of companies have more than 500 employees.
What the organization size is because of the acquisition order process in QuickBooks online?
Quickbooks purchase order process was created with small company in your mind, it really is simple and easy effective.
It is created for someone to go into the system and create a purchase order and send towards the supplier.
There are two problems with this method
Scalability
If you're just one owner or an extremely small business, you will possibly not be creating purchase orders at all. The method might be as easy as calling the vendor as well as the vendor ships anything you need.
However, when you yourself have revenue more than $5M and much more than 100 employees, You are probably creating purchase orders to order product and services.
So manually creating purchase orders is certainly not scalable for a big number of purchasing activity.
Authorization of Spend
The other issue is pre-authorization of spend before you make the acquisition. So before you create a purchase order into the system, you'll want to be sure it is approved in the right authorization level.
If you are using Quickbooks online purchase order process, you then either must have a manual approval process or some type of bolt on to approve the purchase orders before they have been approved.
Luckily there are lots of alternatives for implementing an approval workflow process for the QuickBooks purchase order process. We're going to cover these options in this blog post but more importantly, we are going to cover actions you can take to really make the whole process more efficient and productive. So read on…
Quickbooks purchase order process
Let’s first talk through the procedure in QuickBooks, if you should be just getting started with Quickbooks online process, you will probably find this helpful.
If you should be already familiar with the purchase order process, go ahead and skip this section and go to the next section on the best way to Improve the purchase order approval process
Simple tips to create a purchase order in Quickbooks Online
The best way to produce a purchase order in Quickbooks is always to create is through clicking theIcon-add purchase orderoption on top right-hand side of your QuickBooks Online menu.
Which will open the below menu, click on “Create purchase order” option
Create purchase order menu
As soon as you click the purchase order, Quickbooks opens the following screen where you could key in the important points associated with the purchase order. The screen is self-explanatory but we have highlighted the main element parts of the acquisition order screen.
Create purchase order - Quickbooks
The important thing section includes
1. Payee name which can be also referred to as supplier name.
2. Email: that is where the Quickbook online will send the acquisition order towards the supplier.
3. The ship to handle as well as the item details for the purchase order.
4. The total amount is displayed from the right-hand side.
5. Ship to – may be the address where in actuality the order has to be shipped.
6. Item details: could be the set of goods that needs to be put on the
QuickBooks also allows one to add items directly through the item master so it is easy to reorder commonly purchased items.
After that for you can save the acquisition order or send the acquisition order to the supplier.
ProcureDesk can automate the entire process of sending the acquisition orders after it is often properly authorized. Curious to observe how we do it?click here to schedule a demo.
How exactly to submit the acquisition order to a supplier
Submitting purchase order is very hassle free.
Submitting purchase order
To send the acquisition order to your supplier, you can click on save and send option. When you click on that option, Quickbook will open listed here window
Send PO by email quickbooks
You will find two things to indicate here
On the top left-hand side, you can view the e-mail to that your purchase order would be sent out. This is actually the email you entered while creating the acquisition order. In case you like to change this email, you can go back to the previous screen.
In case you desire to send the physical copy, you are able to print the acquisition order and then send it to the supplier.
In case you wish to download the purchase order, you are able to hover on the PO image and download the purchase order.
To send the purchase order, follow on on Send and Close.
So there you've got it, creating a purchase order in QuickBooks is a very hassle free process.
QuickBooks purchase order approval process
Now let’s talk about what happens before you go into the purchase order screen and produce a purchase order.
The ask for a purchase order is initiated by a worker who needs a certain product or service.
That request might be sent via email & most likely attaching a requisition form.
That request is then being approved through a number of email chains to and fro and lastly, when it's approved, it is provided for the purchasing team or some administrator to create the acquisition order.
In this section, we shall speak about implementing a purchase order approval process in addition to the existing purchase order process in QuickBooks.
However we will not only limit the discussion towards the approval of purchase orders, but we shall cover many components of how to make your whole purchasing process better by improving the end to get rid of purchasing process in QuickBooks.
What's the purchase order cost?
Purchase order cost may be the price of sending the acquisition order off to the supplier. This includes the cost of all the resources necessary to send the purchase order to the supplier. What do we mean by resources?
That features everyone contained in the process together with time spend by them. Let’s know very well what these resources are
Time spent to generate a requisition- this may vary from minutes to a short while dependant on the length of the requisition.
Time spent to have it approved – This can include the full time spent to obtain the requisition approved. Which also includes enough time spent by executives to approve your order.
Just in case if the requisition just isn't routed to the correct person, then it needs to re-routed into the correct person.
Time spent on creating the purchase order: Once the requisition is approved, someone has to produce the purchase order into the system and then send the acquisition order to the supplier.
So each step mentioned above adds to the cost of the acquisition order process.
What does your purchase order cost?
The easiest method to understand your cost is always to do your analysis, we covered this in more detail in simple tips to calculate your personal purchase order cost
Cost per purchase order
If you are just interested in learning what these costs appear to be, as per one study, the price of purchase order could as high as $506.52 or as little as 35.88
Why such an easy range?
There's two reasons for it
• The survey is across different industries therefore the process could vary significantly.
• The $35.88 cost is for top-performing companies whose operations are fully automated. So with regards to the automation level in the purchasing process, this might vary.
As per our assessment, the expense of the acquisition order might be within the high $60 range.
Listed here is an extremely high-level calculation
Purchase order configuration
If you would like calculate your own cost, use ProcureDesk purchase order cost calculator.
Just how to improve QuickBooks purchase order process
Into the above section, we covered the price of a purchase order. When you look at your cost, you almost certainly taking a look at ways are decreasing the price of PO together with overall process cost.
Into the following section, we are going to discuss ways to enhance the purchasing process. We're going to cover how to automate the procedure, we are using ProcureDesk (Yes, we are biased!) as one example but feel free to change it with any kind of purchasing system
Implementing a purchase order approval process
1. This is basically the obvious part of decreasing the purchase order cost using QuickBooks. Instead of manually routing the requisition for approval, you need to use an automated purchasing system like ProcureDesk. Here are the steps active in the process.
A simple way for users to produce a requisition when you look at the system, users should certainly create a requisition using a simple interface in the place of using spreadsheets to enter data.
You can easily further simplify the requisition process by implementing catalogs for frequently purchased items to ensure that users don’t need to type that information. We will discuss supplier catalogs in the next section.
2. The second part of the process is to own an approval process for routing the requisitions to your correct person for approval. Here you need to consider the efficiency of this process and locate a balance between approvals and efficiency of this process.
For instance, if you put up a procedure that each and every purchase has to be approved because of the Department Director, then which may never be the essential efficient utilization of their time.
Imagine when you have 10-15 requisitions each day, then your Director might be spending 20-30 minutes just approving requisitions. Which is not a simple yet effective use of the employee’s time.
The other factor to think about while setting up approval is that the higher you go for approval, the less attention is paid to the details.
If the senior management is concerned that without these approvals, the Spend may be away from budget then there's a straightforward way to that. Implement Budgets and ProcureDesk automatically ensures that the spend remains beneath the budget.
So this is what we suggest on approvals
• Identify the absolute most efficient process for approvals, don’t overcomplicate it.
• Use category-based approval workflows to make sure that you will be purchasing the right products. For instance, all IT purchases should always be routed to IT for approval.
• Define a threshold above that the requisition has to be approved by senior management. In this way you can control that just a few items are sent to the senior management.
Remember that the approval process can invariably be changed. If you should be just starting out and you don’t have much historical data on approval timing a brief history then you may need to try an easier process first and you can add conditions to it as required.
Implement catalogs for easy search
The next phase is implementing an improved purchase process in Quickbooks may be the utilization of catalogs.
Catalogs enable you to group together commonly purchased items so that your users don’t need certainly to keep on entering exactly the same data time and time again.
Catalogs can be utilized for services and products. For example, if you have got a contract with a temp agency for temporary resources, then configure that when you look at the catalog. Next time, someone needs to purchase temp services, they may be able just pick it up from the catalog in the place of calling procurement.
For items like office supplies, you should use external catalogs, also called punch-outs.
Punchouts are external catalogs managed by suppliers however with your particular pricing and product catalog. As an example, as opposed to creating a catalog with 1000’s of items from Staples or Office Depot, you can easily just use their existing catalog.
When Punchout is integrated with a procurement system, it allows the user to go out and look at items then again the device routes the requisition back for approval prior to the order could be placed.
This is the best of both worlds, your users have the internet shopping experience and you're routing the purchases to your chosen vendors.
Improve the productivity of the Purchasing team by implementing a request and quote process.
A purchase order is your final part of the purchasing process. Before that, you would normally see a request and a quote process.
Let’s take an example
Mike in marketing has to print brochures from a brand new product launch. Since it is a brand new product, he doesn’t have a preferred pricing and a preferred supplier.
In case the company has a purchasing team, Mike will get in touch with the team at the moment to inquire of for quotes from a few suppliers. Most likely this a back and forth over email on specifications, quantities, etc.
Once this is certainly finalized, a buyer from the purchasing team would get in touch with the suppliers to obtain quotes via email or higher the phone.
Once that is done, the client sends the quote to the requestor, who then creates a requisition that is sent for approval.
After the requisition is approved, the buyer creates the purchase order and then send to your supplier.
The process stated earlier is certainly not an exaggeration but a really common occurrence in many companies. There are two main issues with the manual request and quote process.
• It is highly inefficient since you can find multiple manual steps along the way and also the same data is being entered in requisition first after which in to the purchase order.
• It is quite hard to keep an eye on quotes for audit purpose. For instance, if your policy requires one to keep track of quotes, then you probably have to search through your emails to find those quotes
The method stated earlier can be easily automated, which increase productivity and lower errors while creating orders.
As an example, Imagine a procedure where in fact the requestor can send the request electronically, the buyer can send that request to the supplier electronically.
Once the response is received, the exact same quote may then be changed into a purchase order. Once the order is approved, the device creates the acquisition order directly in the Quickbooks and then send the PO into the supplier.
This procedure is efficient much less error-prone. Systems like ProcureDesk can quickly achieve this.
Reduce spend through Budget controls
Quickbooks has a great way to structure the budgets in the system.
But how can you link those budgets to your purchases?
• How do you make sure that budget owners have complete visibility to the budget consumption and simply how much of their budgets happen to be consumed and what amount is left?
• How do you make certain that the budget owners can review the purchases ahead of the purchase order is put against their budgets?
They are the questions that each and every company has to address to make certain they will have complete transparency to the process.
This will probably all sound overwhelming but the whole purchasing process may be improved because of the following
• A process whereby the orders are associated with the budgets. For the reason that process, a method is checking whether funds can be obtained resistant to the selected budget (predicated on past consumption).
• A process whereby the purchases are always approved by the budget owners on the basis of the purchase volume.
•A process where you could easily report on purchases made against a certain budget.
All of this may be automated by a purchasing system like ProcureDesk.
Automatically create purchase orders in Quickbooks
We talked about a couple of ideas into the sections above on how to enhance the purchasing process in Quickbooks.
But all of this could be useless when you have to then manually produce the purchase order when you look at the QuickBooks systems.
Luckily, this procedure could be fully automated using purchasing systems. By integrating your purchasing system with QuickBooks online version, you can easily streamline the workflow for purchasing.
After the order is fully approved in your purchasing system, or other front end module for the PO process, the purchase order can then be provided for the QuickBooks system for further processing.
The integration with Quickbooks is hassle free, however you should clearly define the utilization cases for integration and test them to ensure that purchase orders are moving to Quickbooks seamlessly.
For example, In ProcureDesk implementation, we clearly identify most of the use cases by working together with our customers after which set up a test policy for ensuring successful integration.
Automate transmission of a purchase order to suppliers
Even as we saw in the last sections, Quickbooks enables you to send the acquisition order out to your suppliers. You can email it to your suppliers or download the acquisition order and send it out to the suppliers.
Since we now have already automated the purchase order process thus far, why don't you fully automate it by automatically sending the acquisition order into the supplier.
The bolt-on purchasing system you will be using with Quickbooks should easily be able to automatically send the purchase order into the supplier contact.
This way you might be ensured that once your order is approved, there's absolutely no additional step needed to send the acquisition order to your supplier.
One word of caution though, we often observe that our customers don’t maintain a clean vendor database, so you may wish to make certain that your order contacts in your supplier records are correct or over to date. Otherwise, you can easily land up in a situation where orders are not being delivered.
The greatest practice in this area would be to make fully sure you get generic emails for orders, as an example, order@suppliername.com. The cause of this is certainly that supplier sales personnel would often carry on changing if the email used just isn't generic, you must carry on updating the seller records.