With the upcoming release of the emakin Purchase Order app, we wanted to provide a clear explanation of purchase order processes and illustrate why they are so critical to the success of an enterprise. To begin with purchase orders are legally binding documents sent from the buyer to the seller. It describes the items, either products or services, which the buyer agrees to purchase, the quantity and the price. It also outlines the delivery date and terms of payment for the buyer. If the purchase order is accepted by the seller, it then forms a contract between the buyer and seller. It is thus used to control the purchasing of products and services from external suppliers. The more specific the order, the more details will have to be included in the purchase order.
Such orders are generally used when the buyer has an account with the seller from which they want to obtain the goods or services. Since the supplier delivers the purchased items before payment has been received, the PO serves as risk protection since, if the buyer refuses payment, the PO is a legally binding contract between both parties. As such, payment orders are similar to invoices in that they both contain similar information, except that the invoice is prepared by the seller and contains the PO number for reference purposes. The only difference is that invoices generally contain less technical details which are contained in the PO.
Companies which have a working relationship may discontinue using purchase orders in order to speed things up. This is all well and good as long as the specific needs of the both parties are understood by both sides and the items are received on time. But foregoing purchase orders obviously brings with it an inherent danger in the event of a dispute. To begin with, being able to reference the PO can provide an important starting point for identifying where an apparent error may have originated. There are, however, other clear benefits to using a PO app in addition to the legal security it provides.
Using a paper-based procurement process involves generating a lot of excessive documents. Companies will usually process roughly half a dozen documents during a purchasing cycle, including requisitions, purchase orders, quotations, order acknowledgments, advice notes, goods-received notes and invoices. In short, a multitude of documents to create and keep track of for just a single purchase.
The emakin Purchase Order application will give you the information and tools you need to better control your purchasing process, as well as your cash flow. By digitizing the PO process, you can quickly see your obligations to your suppliers, and you can generate push notifications to pay your invoices on time. It is also a good way to avoid overspending by setting spending limits. With the codes generated by the app, the PO can easily be integrated into your company’s accounting processes.
The new application will be available on the emakin App Store in early December.