Purchase Order (PO) System for QuickBooks
QuickBooks PO (Purchase order) module provides a rather easy and straightforward means for companies to create purchase orders Finance departments can simply track the working capital needs to satisfy business obligations. If you should be relying only on vendor invoices then chances are you won’t know the cash flow needs through to the vendor invoice turns up and that may cause uncertainty for a lot of people.
There was one challenge though – to utilize QBO for sale orders you must manually enter every purchase order and therefore could possibly be a bottleneck for Accounting and finance teams.
In this web site post, we are going to cover the essential purchase order process in QuickBooks Online but we will also cover how to make the method better by leveraging purchase order tool that works well with QuickBooks Online or Desktop (a.k.a QuickBooks Enterprise)
But first, let’s have a look at some data about QuickBooks online a.k.a QBO.
Quickbooks online is a widely adopted Product and also have a wide array of customers. According to number from Intuit – the company behind QuickBooks, they usually have over 2.2 million customers using Intuit Quickbooks online. If You want to know about How To Create Purchase Orders In QuickBooks then contact our Proadvisors.
The item will be used over 193 countries & most for the customers are generally smaller businesses or single owners.
However, you would certainly be surprised once you look at several of those small businesses have a lot of employees.
For instance, into the data below from idatalabs.com, almost 40% (total sample size of 3,482 customers) of companies have more than 50 employees.
Quickbooks client base
And around 11% of companies do have more than 500 employees.
What the company size is because of the acquisition order process in QuickBooks online?
Quickbooks purchase order process was created with small company in mind, it really is simple and easy effective.
It is made for someone to go in to the system and produce a purchase order and send to your supplier.
There are 2 problems with this procedure
If you're just one owner or an extremely small company, you do not be creating purchase orders after all. The method might be as easy as calling the vendor and the vendor ships whatever you need.
However, if you have revenue more than $5M and more than 100 employees, You are probably creating purchase orders to order product and services.
So manually creating purchase orders is certainly not scalable for a big volume of purchasing activity.
Authorization of Spend
The other issue is pre-authorization of spend before making the acquisition. So just before create a purchase order into the system, you ought to make sure it really is approved in the right authorization level.
If you utilize Quickbooks online purchase order process, you then either have to have a manual approval process or some sort of bolt on to approve the purchase orders before they are approved.
Luckily there are numerous alternatives for implementing an approval workflow process for the QuickBooks purchase order process. We are going to cover these options in this website post but more importantly, we're going to cover steps you can take to help make the whole process more effective and productive. So read on…
Let’s first talk through the procedure in QuickBooks, if you should be just getting started with Quickbooks online process, you could find this helpful.
If you're already familiar with the acquisition order process, go ahead and skip this section and go directly to the next section on how best to Improve the purchase order approval process
Simple tips to create a purchase order in Quickbooks Online
The easiest way to produce a purchase order in Quickbooks is always to create is through clicking theIcon-add purchase orderoption at the top right-hand side of the QuickBooks Online menu.
That may open the below menu, click on “Create purchase order” option
Create purchase order menu
As soon as you click the purchase order, Quickbooks opens listed here screen where you are able to key in the facts of the purchase order. The screen is self-explanatory but we have highlighted the key sections of the purchase order screen.
Create purchase order - Quickbooks
One of the keys section includes
1. Payee name that is also referred to as supplier name.
2. Email: This is where the Quickbook online will be sending the purchase order towards the supplier.
3. The ship to address as well as the item details for the purchase order.
4. The total amount is displayed on the right-hand side.
5. Ship to – may be the address where in fact the order has to be shipped.
6. Item details: is the list of things that should be put on the
QuickBooks also allows you to add items directly from the item master it is therefore an easy task to reorder commonly purchased items.
From there for you can help to save the acquisition order or send the purchase order to your supplier.
ProcureDesk can automate the process of sending the acquisition orders after it was properly authorized. Curious to see how we do it?click here to schedule a demo.
How exactly to submit the acquisition order to a supplier
Submitting purchase order is very straight forward.
Submitting purchase order
To send the acquisition order into the supplier, you can click on save and send option. As soon as you click on that option, Quickbook will open listed here window
Send PO by email quickbooks
You will find a few things to point out here
On the top left-hand side, you can see the e-mail to that the purchase order would be sent out. Here is the email you entered while creating the purchase order. In the event you wish to change this email, you can return to the earlier screen.
Just in case you want to send the physical copy, you are able to print the acquisition order and then send it into the supplier.
In the event you want to download the purchase order, you can hover on the PO image and download the acquisition order.
To send the acquisition order, follow on on Send and Close.
Generally there you have got it, creating a purchase order in QuickBooks is an extremely straight forward process.
QuickBooks purchase order approval process
Now let’s talk by what happens before you go to your purchase order screen and create a purchase order.
The ask for a purchase order is established by a worker who needs a specific product or service.
That request is probably sent via email and a lot of likely attaching a requisition form.
That request will be being qualified through a series of email chains to and fro and lastly, when it is approved, it is delivered to the purchasing team or some administrator to produce the purchase order.
In this section, we will talk about implementing a purchase order approval process on top of the present purchase order process in QuickBooks.
However we are going to not merely limit the discussion towards the approval of purchase orders, but we shall cover many components of steps to make the entire purchasing process better by improving the end to end purchasing process in QuickBooks.
What is the purchase order cost?
Purchase order cost is the cost of sending the purchase order off to the supplier. This can include the price of most of the resources expected to send the acquisition order to your supplier. What do we mean by resources?
Which includes everyone within the process plus the time spend by them. Let’s know very well what these resources are
Time spent to generate a requisition- this might vary from minutes to a few momemts dependant on the size of the requisition.
Time spent to get it approved – This includes enough time spent to get the requisition approved. That can includes the time spent by executives to approve the order.
In case if the requisition just isn't routed to the correct person, then it requires to re-routed to the correct person.
Time spent on creating the acquisition order: after the requisition is approved, someone needs to create the purchase order into the system and then send the purchase order to your supplier.
So each step mentioned above increases the cost of the acquisition order process.
So what does your purchase order cost?
The easiest method to understand your cost is always to do your analysis, we covered this in detail in just how to calculate your own purchase order cost
Cost per purchase order
If you're just interested in learning what these costs look like, as per one study, the price of purchase order could as high as $506.52 or as little as 35.88
Why such an easy range?
There are two reasons for it
• The survey is across different industries and so the process could vary significantly.
• The $35.88 cost is actually for top-performing companies whose operations are fully automated. So with regards to the automation level into the purchasing process, this may vary.
As per our assessment, the expense of the purchase order might be into the high $60 range.
Let me reveal an extremely high-level calculation
Purchase order configuration
If you'd like to calculate your own cost, use ProcureDesk purchase order cost calculator.
How exactly to improve QuickBooks purchase order process
When you look at the above section, we covered the price of a purchase order. As soon as you glance at your cost, you probably looking at ways are decreasing the price of PO plus the overall process cost.
Into the following section, we're going to discuss methods to enhance the purchasing process. We're going to cover how exactly to automate the process, we have been using ProcureDesk (Yes, our company is biased!) as an example but feel free to change it with any kind of purchasing system
Implementing a purchase order approval process
1. This is basically the obvious step up reducing the purchase order cost using QuickBooks. Rather than manually routing the requisition for approval, you can use an automated purchasing system like ProcureDesk. Here you will find the steps involved in the process.
An easy way for users to generate a requisition when you look at the system, users should certainly create a requisition using a straightforward interface in place of using spreadsheets to enter data.
You can easily further simplify the requisition process by implementing catalogs for frequently purchased items to make certain that users don’t have to type that information. We will discuss supplier catalogs in the next section.
2. The second part of the procedure is to have an approval process for routing the requisitions towards the correct person for approval. Here you need to consider the efficiency of this process in order to find a balance between approvals and efficiency for the process.
For instance, if you put up an activity that every purchase needs to be approved because of the Department Director, then that might never be the most efficient use of their time.
Imagine when you yourself have 10-15 requisitions a day, then your Director may be spending 20-30 minutes just approving requisitions. That is not a competent use of the employee’s time.
One other factor to think about while setting up approval is that the higher you choose to go for approval, the less attention is paid to your details.
If the senior management is worried that without these approvals, the Spend may be out of budget then there is an easy solution to that. Implement Budgets and ProcureDesk automatically ensures that the spend remains underneath the budget.
So this is what we suggest on approvals
• Identify the essential efficient process for approvals, don’t overcomplicate it.
• Use category-based approval workflows to make sure that you will be purchasing the right products. For example, all IT purchases should really be routed to IT for approval.
• Define a threshold above which the requisition needs to be approved by senior management. Because of this you can easily control that only some items are provided for the senior management.
Keep in mind that the approval process can always be changed. If you should be just getting started and you don’t have much historical data on approval timing a history then you might have to try an easier process first and then add conditions to it as required.
Implement catalogs for easy search
The next step is implementing an improved purchase process in Quickbooks could be the usage of catalogs.
Catalogs enable you to group together commonly purchased items which means that your users don’t have to carry on entering the exact same data over and over repeatedly.
Catalogs can be utilized for products and services. For instance, if you have got a contract with a temp agency for temporary resources, then configure that when you look at the catalog. The next time, someone needs to purchase temp services, they are able to just pick it up through the catalog as opposed to calling procurement.
For items like office supplies, you need to use external catalogs, also known as punch-outs.
Punchouts are external catalogs managed by suppliers however with your specific pricing and product catalog. For example, rather than creating a catalog with 1000’s of items from Staples or Office Depot, it is possible to just use their existing catalog.
When Punchout is integrated with a procurement system, it allows the consumer to venture out and browse the items but then the system routes the requisition back for approval prior to the order may be placed.
This is actually the best of both worlds, your users obtain the internet shopping experience and you're routing the purchases to your preferred vendors.
Improve the productivity regarding the Purchasing team by implementing a request and quote process.
A purchase order is a final part of the purchasing process. Before that, you would normally see a request and a quote process.
Let’s take a good example
Mike in marketing has to print brochures from a unique product launch. Since it is a unique product, he does not have a preferred pricing and a preferred supplier.
When your company has a purchasing team, Mike will reach out to the group at this time to inquire about for quotes from a couple of suppliers. Most likely this a back and forth over email on specifications, quantities, etc.
Once that is finalized, a buyer from the purchasing team would reach out to the suppliers to get quotes via email or higher the telephone.
Once this is certainly done, the buyer sends the quote towards the requestor, who then creates a requisition this is certainly sent for approval.
Following the requisition is approved, the client creates the purchase order and then send to the supplier.
The procedure mentioned above is certainly not an exaggeration but a really common occurrence in a lot of companies. There are 2 issues with the manual request and quote process.
• It is highly inefficient since there are multiple manual steps in the process while the same data is being entered in requisition first and then into the purchase order.
• It is quite difficult to keep track of quotes for audit purpose. For instance, if your policy requires one to keep an eye on quotes, then chances are you probably have to search through your emails to get those quotes
The procedure mentioned previously can easily be automated, which increase productivity and reduce errors while creating orders.
For example, Imagine an activity where the requestor can send the request electronically, the buyer can send that request to your supplier electronically.
After the response is received, the exact same quote may then be converted into a purchase order. Once the order is approved, the machine creates the acquisition order directly when you look at the Quickbooks and then send the PO to the supplier.
This procedure is efficient and less error-prone. Systems like ProcureDesk can quickly accomplish this.
Reduce spend through Budget controls
Quickbooks has a terrific way to structure the budgets within the system.
But how will you link those budgets to your purchases?
• How do you make certain that budget owners have complete visibility to the budget consumption and simply how much of these budgets already are consumed and what amount is left?
• how will you ensure that the budget owners can review the purchases prior to the purchase order is positioned against their budgets?
They are the questions that every company has to address to make sure they will have complete transparency into the process.
This may all sound overwhelming but the whole purchasing process could be improved by the following
• A process whereby the orders are associated with the budgets. For the reason that process, a method is checking whether funds can be obtained from the selected budget (according to past consumption).
• A process whereby the purchases will always approved by the budget owners based on the purchase volume.
•A process where you could easily report on purchases made against a certain budget.
All this work can be automated by a purchasing system like ProcureDesk.
Automatically create purchase orders in Quickbooks
We talked about a couple of ideas when you look at the sections above about how to increase the purchasing process in Quickbooks.
But all of this will be useless if you need to then manually produce the purchase order within the QuickBooks systems.
Luckily, this procedure may be fully automated using purchasing systems. By integrating your purchasing system with QuickBooks online version, it is simple to streamline the workflow for purchasing.
When the order is fully approved in your purchasing system, or other front end module when it comes to PO process, the purchase order are able to be delivered to the QuickBooks system for further processing.
The integration with Quickbooks is hassle free, you should clearly define the use cases for integration and test them to ensure purchase orders are moving to Quickbooks seamlessly.
For instance, In ProcureDesk implementation, we clearly identify most of the use cases by dealing with our customers and then set up a test arrange for ensuring successful integration.
Automate transmission of a purchase order to suppliers
Even as we saw in the last sections, Quickbooks allows you to send the purchase order off to your suppliers. You can easily email it to your suppliers or download the purchase order and send it off to the suppliers.
Since we now have already automated the purchase order process to date, have you thought to fully automate it by automatically sending the purchase order towards the supplier.
The bolt-on purchasing system you are using with Quickbooks should easily manage to automatically send the acquisition order to your supplier contact.
Because of this you might be ensured that once your order is approved, there isn't any additional step required to send the purchase order to the supplier.
One word of caution though, we often see that our customers don’t maintain a clear vendor database, so you may would you like to make sure that the order contacts in your supplier records are correct and up to date. Otherwise, you can easily land up in times where orders are not being delivered.
The very best practice of this type would be to make fully sure you get generic emails for orders, as an example, email@example.com. The cause of this is certainly that supplier sales personnel would often carry on changing and in case the e-mail used is certainly not generic, you need to keep on updating the vendor records.