The need for purchase orders means inventory is moving and you’re making sales, which is great for business. Restocking inventory to fulfill sales and keep your online stores stocked with popular items is an important part of running an e-commerce business. However, having to constantly create purchase orders is a time-consuming part of inventory management, especially for wholesalers that purchase inventory from several different suppliers.
As such, many small business owners fall behind on this essential activity. From simply running short on time to forgetting about low inventory levels, purchase orders can easily get pushed to the side. If that happens, you could find yourself in a tough spot with either too much or not enough inventory.
If your business is lacking the organization, time, and process needed to complete purchase orders in a timely manner, you should consider automation. With automation, you can set up purchase orders to complete themselves at certain stock thresholds—eliminating manual data entry and errors that may occur.
In this guide, we’ll cover why purchase orders are important to small business owners (SMBs), provide an overview of purchase orders, and show you how to automate purchase orders with QuickBooks Commerce, so you can work more efficiently. Use the links below to navigate the post.
- What are purchase orders?
- Why are purchase orders important?
- Creating purchase orders
- Why should you automate purchase orders?
- How to automate your purchase order process with QuickBooks Commerce
- Advantages of using QuickBooks Commerce to automate your PO process
What are purchase orders?
Purchase orders (POs)—also known as purchase requests or purchase requisitions—provide you with inventory documentation you’ve purchased to stock your business and fulfill customer orders. They provide a paper trail and tangible documentation that can be used as a point of reference.
Why are purchase orders important?
Purchase orders are vital records that you’ll be grateful you’ve taken the time to create. A benefit of purchase orders is that they establish a paper trail and set the PO process in motion for restocking your inventory. As you likely know, having sufficient inventory is one of the most important aspects of keeping a fully stocked site and maintaining a smooth order-fulfillment process.
Since purchase orders are a necessary and essential part of business procurement, getting them right is integral to your operations. This is especially true as your small business grows or you expand your line of merchandise. The wrong quantity or item in a purchase order can result in a loss of sales and possibly even customers. On the other hand, if you happen to order too much inventory, you might have your money tied up in stock that’s just sitting idle.
Purchase orders are also important in creating a business footprint and records of your expenses. Serving as documentation of your purchase history, POs show where you’ve purchased inventory from and how you’re spending. As such, you should hold onto purchase orders for future reference.
Creating purchase orders
Once you’ve determined which inventory you need to restock, it’s time to create a purchase order. Purchase orders should include:
- Which products you want—it’s important to be as precise as possible to make sure you receive the right items
- How much of each product—quantity should be based on demand
- Price per unit and a total sum
- Delivery details—date and location
- Billing information and payment details
While it might seem fairly straightforward, you’ll likely have to create quite a few purchase orders each month. A few minutes here and there can add up, especially if you work with many different vendors.
As a small business owner, you should be looking for ways to streamline your processes, so your limited time can be put to better use. This is especially true for repetitive tasks you do every month, or more likely, several times per month. The less time—and money—spent on incorrect inventory purchases is more time spent focusing on core business tasks.
So, how can you reduce time spent on PO generation each month? Automation—automation solutions can streamline every aspect of the procurement process, including requisition approval workflows.
Why should you automate purchase orders?
For many years, business owners and their team members have written or typed out manual purchase orders and sent them to suppliers. However, this can be time consuming, and when you’re already juggling a lot, it can be hard to find the time in the day. Using an automated purchase order system streamlines the purchasing process and saves time.
Additionally, using manual processes for purchase orders runs the risk of human error, like inputting the wrong reorder quantity or delivery date. And, unfortunately, many small business owners have learned the hard way that these mistakes can have big consequences. Mistakes on a purchase order—even one incorrect line item—can leave you with extra inventory you can’t afford or running out of stock on a popular item.
Furthermore, having too much inventory on hand can impact your cash flow. Both of these situations can be stressful and negatively impact your bottom line. Automation software alleviates these issues and cuts down on the approval process, making everything easier for your procurement team.
Utilizing automation to create POs for you can benefit your business by saving you time and money. With order automation, you can set thresholds for when inventory should be reordered, so you don’t have to worry about it. And fortunately, automating this process can be simple with purchase order software.
Automate your purchase order process with QuickBooks Commerce
Since purchase orders are so critical to smooth operations and inventory management, it’s a smart idea to learn how to automate them. First, you’ll need to invest in an inventory and PO management tool that will effectively manage your suppliers and vendors, such as QuickBooks Commerce. With this tool, you can improve several business processes at once. QuickBooks Commerce is integrated with QuickBooks Online, so you can create professional purchase orders, send the bill to vendors, and record the transactions all in one platform.
Additionally, QuickBooks can save information from purchase orders and generate scheduled POs for recurring purchases. It’s really that easy. Here’s how to automate a purchase order with QuickBooks:
- Create a new PO—a purchase order number will be automatically generated
- Select the supplier or create a new supplier
- Add billing and shipping details, including when you want the inventory delivered
- Add purchase order items and select quantities—pricing is automatically adjusted to match different quantities as needed
- Save and email or print purchase orders
- Complete the purchasing workflow
- Mark purchase orders as received or partially received
- Easily generate reorder reports and demand forecasts to know exactly when reordering is needed
- Quickly audit all purchase orders generated within the system, regardless of status
From the dashboard, you can easily create, review, and update all outstanding purchase orders, with stock levels and preloaded supplier information, all in one place. As an inventory management system with a holistic and integrated approach to monitoring stock levels, QuickBooks Commerce makes creating and managing PO flows extremely simple.
Advantages of using QuickBooks to automate your PO process
With its integrated approach to inventory management, our platform makes creating and managing purchase orders simple and easily trackable. Take advantage of functionalities like automated POs and intuitive inventory management features, to work smarter, accurately plan for the future, and provide a better customer experience.
Get started with QuickBooks Commerce today and see how you can speed up your purchase order process, improve inventory management, and drive sales for your business.
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