Purchase order systems allow businesses to request goods and services for business use while providing an audit trail to track financial assets. Choosing between manual and automated systems depends on the number of purchase orders generated, number of employees using the system, and location of the purchasing department. Accounting department access and audit tracking are also important considerations.
A purchase order system is the sequence of steps an individual must follow to request the acquisition of goods and services for business use. These systems provide an audit trail to track the movement of the company’s financial assets. There are multiple systems in the enterprise environment for systems. Most focus on a company’s internal accounting and document system. Selecting the best purchase order system requires consideration of a number of factors relating to a company’s business systems.
Business owners and managers should decide whether they want to use a manual or an automated purchase order system. Manual systems generally include the use of a paper notebook that contains sequentially numbered purchase orders. An employee will fill out the form, which typically asks for vendor, price, quantity, description, and accounting code, before submitting it for approval. These documents usually include a carbon copy held on file. An automated system works similarly, except that employees will use the company’s business or accounting software and fill out an electronic purchase order document.
The number of purchase orders that a business will generate through its normal operations will play an important role in selecting a purchase order system. Using a manual system can become tedious and result in lost documents, causing employees to recreate the purchase order. Additionally, companies are typically required to keep these records for several years, depending on applicable federal or state laws. An automated purchase order system can alleviate some of these problems, although learning and using the computerized version may require more training.
Other factors to consider when selecting a purchase order system are the number of employees who use purchase orders and the location of the company’s purchasing department. Allowing multiple employees to log in and create purchase orders may require companies to have multiple paperwork or multiple usernames available to access the purchase order form. Large organizations will often have a purchasing department or purchasing manager to handle the purchase order at the time of ordering. Having multiple people delivering purchase orders can create an information overflow in the purchasing department. Companies may need to restrict access to the purchase order system to avoid this problem.
Companies will also need to consider how purchase orders flow into the accounting department. Individuals in the accounting department need easy access to the system so they can review purchase orders before paying bills. Auditors will also need to have access to determine how information flows through the company. The inability to track the purchase order through each stage of the system can result in document changes that compromise a significant portion of the company’s cash management process.
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