The optional upstream purchase order approval process ensures that each order is justified, and confirms in particular that the order itself has been approved internally. Employees assess the current need and a previously established authorisation matrix is used to ensure that the order has been approved by the relevant authorised parties before it is actually issued.
Many businesses’ procurement processes are not yet – or at least not yet fully – holistically structured. But a comprehensive, digitised end-to-end purchasing process – the so-called “purchase-to-pay process” – has enormous potential for reducing costs, increasing transparency, streamlining processes and improving the quality of decisions made.
Not all businesses use an ERP system that can monitor the entire ordering chain. Approval requests for purchases often trace a circuitous route across various desks, purchases are often decentralised, and invoices are sent to the individual purchaser who then passes them on to the accounting department. There, the invoice (and potentially the purchase order that triggered it) are often only retroactively approved – after the goods have already arrived or the service has been provided.
With the Purchase-to-Pay solution based on Kendox InfoShare, the entire process is mapped in a holistic, structured fashion – all the way from purchase order approval to supplier selection (taking any existing supplier contracts into account), initiating the order, confirming receipt of goods or services, processing incoming invoices and initiating payment. As a result, the entire procurement process is fully transparent for all parties, orders become much easier to control, invoices are approved much more quickly and “wild purchasing” – from non-strategic suppliers, for example – is minimised.
The digital procurement process
Suppliers can be selected based on individual requirements, either as part of the purchase requisition process by the requester themselves, or only after the purchase order is approved – in which case this may be handled by the purchasing department. Optionally, the purchasing department can also override the requester’s choice – for example if ongoing contracts need to be maintained with an existing supplier.
Once any required quotes have been obtained, the order itself is issued by the purchasing department. As soon as the order is issued, the relevant data is supplied to downstream subprocesses – “services received” and “invoices received”. Naturally, the quotes you receive can be incorporated into the process and viewed at any time.
Once the goods ordered have arrived or the agreed services have been provided, the requester provides confirmation. They can also indicate that goods or services have been partially delivered. Receipt of services is a condition for processing and approving the associated invoice. If goods or services are not marked as received, confirmation of receipt will be automatically requested as part of the invoice approval process.
Once the invoice arrives and is digitised (if necessary), it goes through the customisable approval process. Integrated capture functions, used to automatically extract header and line item data from the invoice and compare it against existing order data, allow the approval process itself to be very highly automated and therefore streamlined, making the most of any cost-saving potential. If the invoice shows any discrepancies with the order or confirmation of receipt, manual multi-tier approval may be requested. If not, the invoice can proceed directly to automatic processing. Approval is complete once accounting data is handed over to the downstream accounting or ERP system.
All documents within the purchase-to-pay process – including written purchase requisitions, quotes, orders, delivery notes, invoices and any other accompanying material – can be managed efficiently using Kendox InfoShare, the DMS/ECM solution integrated into this process. This ensures that documents can be accessed at any point in the process and ensures in particular that they are archived in compliance with legal requirements.