Why Your Business Needs Purchase Order Automation in 2024

In the ever-evolving world of finance operations, Accounts Payable (AP) management remains a critical yet often under-optimised function. Despite the rapid advancements and efficiency gains witnessed in many areas of business and finance, AP processes are still plagued with inefficiencies. The Times reported that more than half of small and medium-sized enterprises (SMEs) experienced an increase in late payments in 2023, illustrating the persistent challenges in the AP sector. While delayed payments are the most visible manifestation of these inefficiencies, the root of the problem often originates much earlier, during the internal organisation stage of Purchase Order creation.

In this blog, we will outline how this initial stage of the AP process can be significantly improved through automation, setting the stage for a more efficient, streamlined financial operation in your business.

The Challenges of Manual Processing 

Manual  processing of purchase requests and orders is fraught with challenges: 

• Inefficiency and time-consuming procedures 
• Lack of accountability and visibility in the process 
• Higher security risks 
• Absence of process regulations or control 

Understanding Purchase Order Automation 

Purchase Order Automation revolutionises the traditional purchase order process. It involves using centralised software to automatically manage and oversee purchase requests, from raising and approving to creating orders within the ERP system. This technology significantly reduces the need for manual data entry and the physical routing of purchase orders, enhancing efficiency and accuracy in the process.

Automation in Purchase Orders: Enhancing Efficiency and Precision 

While automation can revolutionise many aspects of purchase order management, it is important to acknowledge that human intervention is both necessary and financially strategic during this organisation-internal stage. Striking the balance between human oversight and technological automation is crucial.

While discerning tasks such as approving or rejecting purchase requests necessitate and benefit from human discernment and strategic insight, automation can take over administrative tasks and equip decision-makers with a toolkit for smart spend decisions. 

Here are 4 ways that automation can improve the Purchase Order process within your organisation:

• Automatic Assignment to Approval Workflows: Automating the routing of purchase requests to appropriate predefined approval workflows ensures efficiency in processing and timeliness. Faster approvals reduce the risk of unapproved spend and improve the agility of the company, able to respond quickly and strategically to changes in circumstance and commit the necessary spend to do so. 
• AI-Generated Insights for Approvers: Kloo harnesses AI to collate and present crucial insights to approvers at the point of approval. This includes information on budget compliance, historic spending, supplier details, and alerts for potential duplicate spending, all delivered directly to their inbox.
  
  
  
• Automatic Generation of POs from Requests: Once a request is approved, Kloo automatically generates the corresponding purchase order,  increasing the accuracy and efficiency of the process. 
• Automatic Transmission of POs to Suppliers: Finally, Kloo automatically sends the approved purchase order to the supplier, ensuring prompt delivery and minimising the risk of manual errors.

Key Takeaways

In conclusion, Purchase Order Automation represents a crucial step for finance teams seeking to optimise their operations. By integrating this technology, businesses can achieve unparalleled efficiency, accuracy, and cost savings, marking the end of manual and cumbersome purchase order management. 

Kloo's platform streamlines Purchase Order management from start to finish, removing unnecessary manual tasks like PO generation, and providing strategic support where human intervention is necessary, empowering approvers with the insights to make faster and more effective spend decisions. 

Learn more about Kloo's PO Management solution here.