June 7, 2023
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Xero is known for its extensive functionality as a financial management system, providing businesses with a comprehensive suite of operational tools. Its features encompass finance, CRM, e-commerce, and more, making it a staple software for organisations worldwide. While Xero offers robust capabilities, some specialised areas of financial operations require a solution more tightly tailored to the pain points experienced in this area. Purchase requisition is one such function, an essential part of the procure-to-pay process that can often go astray without proper governance and appropriate software.
In the complex process of procurement, the stages of purchase requisition, approval, and the issuance of purchase orders (POs) are essential steps in a quality procurement process. While Xero provides the core functionality required to manage these aspects of the procure-to-pay (P2P) cycle, there is still a very real opportunity for optimisation. Kloo, an innovative solution that integrates seamlessly with Xero, brings AI-powered enhancements across the P2P process. This blog explores how Kloo transforms the procurement process, addressing the inherent challenges and offering a more intuitive and efficient pathway for finance professionals.
Purchase Orders (POs) are a critical element of financial control within an organisation. They serve as the first line of defence against unauthorised expenditures that may violate established budgets and business priorities. POs not only assist in forecasting cash outflow but also play a crucial role in fraud prevention. By thoroughly reviewing, assessing, and approving expenditures through POs, organisations can create a complete audit trail. This meticulous process helps in identifying and addressing issues such as duplicate spending or unintentional overspending, ensuring financial integrity and adherence to budgetary constraints.
The procurement process, especially at the stages of purchase requisition and PO issuance, involves various stakeholders across an organisation, many of whom may not be well-acquainted with Xero. This lack of familiarity often leads to significant delays in initiating spend requests. Research shows that an average of 51% of businesses report instances where purchase requests are made after spend has already been committed. Additionally, POs are notorious for having low adoption rates and yet, despite of this, they are incredibly important for organisational clarity and financial gain.
This disconnect not only introduces bottlenecks in approval workflows but also impedes the timely dispatch of POs to suppliers, ultimately slowing down the entire procurement cycle. This highlights the importance of increasing functionality and user experience of navigating POs as part of the standard procure-to-pay process, and being proactive in looking for solutions that have this as a priority.
Before we dive into the individual features to look out for in a purchase order management and purchase requisition system, let's discuss Xero's current process for PO requisition.
Xero's existing system for managing purchase requests, while effective, presents certain challenges for users who are not familiar with its complexities. Considering that the requisition process usually involves collaboration across various departments, the need for users to interact with Xero's busy interface can be a significant obstacle, particularly for those outside the finance domain.
Thus, it is important to consider the particular feature enhancements that can be offered from external purchase requisition tools. Kloo stands out as a viable option for these functions, by streamlining the purchase requisition process with AI-powered automation. Let's dive into Kloo's innovative and advanced offerings.
Kloo, by leveraging AI-powered automation to help streamline workflows, provides a variety of benefits for Xero users looking to adopt an innovative and advanced solution for purchase order management. Here are some of our key enhancements that we offer to improve overall efficiency and clarity of the Xero experience:
A key aspect of streamlining the purchase requisition process is making it accessible to all stakeholders, regardless of their familiarity with financial systems. Kloo innovatively addresses this by enabling the raising of purchase requests through natural language via email. This intuitive approach significantly reduces the barrier to engagement, allowing individuals without a finance background to easily initiate requisitions and improve user experience. By simplifying the process, Kloo ensures adherence to procurement policies, minimising issues like unapproved spending and enhancing organisational efficiency.
The approval process for purchase requests merits a detailed exploration of its own, which you can read here. Kloo offers highly customisable workflows that can be adapted to specific roles or users within the organisation. It uses AI-generated insights to provide approvers with valuable context, enhancing decision-making. Kloo's intelligent system can conditionally route purchase requests, based on various parameters such as expenditure thresholds or department-specific criteria, ensuring a smooth and efficient approval process.
One of the standout features of Kloo is its capability to automate the generation and dispatch of POs directly to suppliers. This automation not only reduces manual intervention but also significantly accelerates the procurement cycle. By ensuring that POs are sent promptly and accurately, Kloo facilitates smoother transactions and strengthens supplier relationships, supporting a more effective supply chain management.
User Experience: Making the process simpler enhances overall user satisfaction by removing friction and making the system more easily accessible.
Compliance: By making it easier to follow official procedures for expenditure approval, there's a higher likelihood of adherence, reducing the risk of bypassing established protocols and maverick spend. This can have serious implications for a business' bottom line.
Strategic Oversight: Improved system adoption and compliance offer financial decision-makers a comprehensive view of procurement activities, enabling informed decisions regarding the approval or rejection of purchase requests.
To summarise, while Xero offers a solid foundation for managing business operations, its current offering for purchase requisition falls short. The integration of AI, particularly in the area of purchase requisitions, marks a new phase of efficiency and user experience. Kloo's AI-powered approach not only simplifies the process but also ensures greater compliance and strategic insight into organisational spending.
Read more on how Kloo is transforming purchase order management at our Xero integration page.
