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Resources   /   Glossary

Purchase Order Flow

The purchase order process may vary slightly between organizations and industries, but these fundamental steps provide a comprehensive overview of the typical procurement workflow.

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What is the Purchase Order Process?

The purchase order (PO) process is a series of steps that an organization follows to request, authorize, and track the procurement of goods and services from suppliers. This process helps ensure that purchases are made efficiently, in compliance with company policies, and that accurate records are maintained. Here is a typical purchase order process:

Purchase Request – Identify the need for goods or services, and create a purchase requisition.
Approval – Obtain approval for the purchase requisition from relevant authorities.
Create and Approve Purchase Order – Generate a formal purchase order, and obtain necessary approvals.
Fulfillment – Supplier delivers goods or services as specified in the purchase order.
Invoice and Payment – Match supplier’s invoice with the purchase order, approve for payment, and process payment.

By following a well-defined purchase order process, organizations can efficiently manage their procurement activities, maintain accurate financial records, and uphold accountability in their purchasing transactions.

Purchase Order Process Flowchart

For B2B organizations, visualizing the purchase order workflow is crucial for ensuring smooth procurement operations and maintaining alignment across different departments involved in the process. A well-defined purchase order workflow diagram serves as a valuable tool for documenting the intricate steps and decision points within the organization’s agreed-upon purchasing procedures. Just look at this typical purchase order process flowchart:

• Create requisition
• Approve requisition
• Create purchase order
• Send purchase order to supplier
• Receive order
• Process invoice
• Approve payment

A purchase order workflow diagram can define the distinct roles and responsibilities of different stakeholders involved in the process. This feature is particularly beneficial in B2B environments, where multiple departments, such as procurement, finance, and operations, collaborate to execute purchase orders effectively.

With a comprehensive web-based purchase order software like AvidBuy, a purchase order is automatically sent to the supplier, after which an invoice is generated and matched against the purchase order so payments are accurate.

Key Differences Between Manual and Automated Purchase Order Process

The difference between a manual purchase order process and an automated purchase order process lies in the methods and tools used to initiate, manage, and track the procurement of goods and services. Here are key distinctions between the two:

Documentation – Manual POs are paper-based while automated POs are usually digital.
Approval workflow – Manual approvals involve physical signatures and routing while automated approvals are sent and signed electronically.
Tracking and Follow Up – Manual POs offer limited visibility as they move between departments internally. Automated POs can be tracked and updated in real time.

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