It’s Time for a Finance Revamp in 2024
A classic line we hear at Zahara all too often is “We are too small for POs”. We completely agree that an owner-managed business is too small; however, if employees are buying for the business and using company money, then why not implement controls that either allow or prevent spend on behalf of the company? My best advice is to adopt good habits from the start and formalise this process early. There’s one straightforward way to do this, and it’s by using a purchase order solution.
Table of Contents
Don’t leave it too long to implement a purchase order solution
Implementing even the best PO system later down the line can be stressful. If you leave it too long and people get stuck in their ways it can be hard to adopt new processes.
With inflation hitting a 41-year high last year, the costs of everything are through the roof, and although it’s falling, we’re not out of the woods yet. We, and many others, strongly believe that there has never been a more critical time to manage costs. The focus is often on increasing sales to maximise company profit, but why not implement a PO system to manage, track and gain sight of costs, even before they are incurred, giving you that chance to intercept if needed?
When trying to drive profit we often look to sales, but managing costs effectively and reducing unnecessary spend is sometimes easier and quicker than increasing sales in the short term. Sure, this doesn’t result in long-term company growth, but for the short term it will give great insight into spending patterns, stop unwanted spending, and get the company practicing good habits for the future.
“What’s wrong with my current purchase order process?”
You might be asking why you would need a bit of software to help with this. Well, you can do this manually of course (we can’t stop you!) but if you did, it would probably look like this:
- Email a manager to gain approval to purchase
- Save the reply confirmation email as proof of approval
- Obtain a PO number, maybe from an Excel Spreadsheet
- Type out the PO in Word or Excel
- Email supplier with the PO
- Save PO with approval email and email to supplier
Why choose a purchase order solution?
As you can see, this manual system is quite a process and that’s before the invoice has even arrived. Swapping this manual process for an automated PO system can simplify this whole process from taking hours to just a few minutes. If you choose the right software it will only take a few clicks to create the PO. Sending the PO for approval internally, picking a PO number, creating a PDF of the PO, emailing it out to a supplier and saving all this information together, all happens automatically in a matter of minutes. (This is totally dependant on how speedy your approvers are though!)
For increased purchasing power, pick a purchase order software that also includes budget functionality. Some will allow you to input a budget that will be checked against when raising a PO and potentially automatically reject, if the budget is exceeded. This negates the need for someone to physically check a budget and approve the spend, the software will do this for you.
What do you reckon?
Whether you were considering a purchase order solution already, or if it was at the bottom of your priority list, we hope you can envision what a difference it would make. The main purpose of PO software is to make your life easier, so why not take advantage of that?
We’re not the only ones who think PO software is the way to go. The Institute of Financial Management and Leadership agree that embracing automation, specifically in regard to POs, should be a top priority in 2024. They rank it at the top of their list of tips to consider for the new year.
What are your thoughts? You can always talk to one of our automation specialists if you’d like a further explanation or want to quell any concerns.
