Procurement software includes e-procurement and logistics management. It is often part of an ERP or accounting package, with integrated solutions for purchasing activity and financial reporting. E-procurement allows users to purchase goods from approved suppliers via an internal system linked to accounting software, with an approval process and electronic purchase orders. E-invoicing ensures only received orders are processed for payment. E-procurement offers significant savings and standard procurement software tracks spending activity and policy compliance.
There are two main types of procurement software: e-procurement or logistics management. Procurement software is typically part of an enterprise resource planning (ERP) solution or accounting package. Most software vendors offer a fully integrated solution that incorporates purchasing activity into your accounting system. The advantage of this type of software is the ability to accurately report all financial commitments at any time.
Sourcing or purchasing is all activity related to the acquisition of goods and services for use by the business. A standard procurement system allows users to create purchase requisitions, goods receipts, purchase orders, and invoices. Returns, credit notes, and delivery confirmation are options often included in this type of software. The best procurement software includes meaningful reporting capabilities, automated approval workflows, and engagement tracking.
Electronic procurement, or e-procurement, is procurement software used to purchase goods from other suppliers via their websites. Typically, the user accesses an internal electronic procurement solution that is linked to the accounting software. The user can select from a list of approved suppliers and browse their catalogs for products. When selecting products, the items are noted in the e-procurement software.
You are responsible for assigning internal accounts to the items in your cart. The internal approval process is then triggered, typically with automated emails or related tools. Upon approval, an electronic purchase order is sent to the supplier. When the items are received, the user logs back into the electronic procurement system to process the goods receipt.
The e-invoicing process allows authorized companies to send invoices directly to the customer electronically. Most systems have an automatic process in place to ensure that only received orders are sent for payment. Other companies require that each invoice be manually reviewed and approved before being processed for payment.
E-procurement software has experienced tremendous growth over the past five years and is expected to continue to grow. There are significant savings available to institutions implementing e-procurement. The savings are both large dollar savings due to reduced time to process invoices and slight dollar savings due to reduced staff time required to process an order. Standard procurement software is a control mechanism commonly used to track spending activity and monitor the prices that suppliers charge, as well as to ensure policy compliance.
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