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A procurement system manages the purchasing process and can be electronic or standard, with features including purchase requisitions, purchase orders, and invoice processing. The system can result in cost savings and increased efficiency, with electronic procurement reducing paperwork. Standard procurement is fully integrated with accounting software and includes reporting, analytics, and internal controls. Implementing a procurement system can improve operational efficiency.
A procurement system is typically a computer system designed to manage the procurement process. Procurement is a term used to describe the purchasing activity for a business or organization. There are two main types of procurement systems: electronic procurement and standard procurement. Both types of systems are widely available and are often included in an enterprise resource planning (ERP) or accounting software product.
While the features provided vary by software, a typical procurement tool includes purchase requisitions, purchase orders, goods receipts, and invoice processing. In addition to these basic requirements, most systems include a variety of reporting tools. Approval processes, controls and integrated fund management tools are usually standard in larger products.
The main concept of procurement is that advanced planning, scheduling and group purchasing will result in cost savings, more efficient business operations and therefore higher profitability. A procurement system is used to manage this process, providing invoice delivery times, total spend tracking by commodity type, as well as financial commitments and cash flow management. The complete implementation of a procurement system usually involves significant changes in the existing business process, as the system will require certain internal controls and procedures to be in place.
An electronic procurement system is also known as e-procurement. This term is used to describe software that allows buyers to access supplier catalogs over the Internet, as well as accept electronic invoices. Buyers select their materials, indicate the accounts to be debited for the purchase, and create a purchase order in the accounting system. All procurement related activities are completed electronically, reducing paperwork and increasing efficiency.
Electronic invoice processing allows selected companies to make invoice review and approval even easier. The data is then routed through a series of online approvals before being processed for payment in the accounting system. This type of procurement system is very popular in large companies, where procurement contracts are in place to handle the expense business. For these companies, reducing staff time to process invoices offers an excellent return on investment.
A standard procurement system is fully integrated with the accounting software package used by the organization. All purchasing activity is tracked and managed through this module, allowing the company to control spending and track opportunities for greater savings. Reporting, analytics and internal controls are all built into this type of software and are designed according to best practices. Implementing a procurement system is one of the easiest ways to improve operational efficiency.
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