Purchase orders act as a contract between you, your employees and your suppliers. POs are something you can keep hold of to negotiate terms, too, and they’re important to log for financial records.
Without a reliable way of tracking your purchases, you may over-spend, fail to identify fraudulent behaviour, or even miss out on some satisfying tax cuts. And your small business doesn’t have the flexibility or money to cut corners and risk washing money down the drain.
So, how exactly can POs help your small business? Here are three reasons why your company should be recording your purchase order processes today.
1. Stay in control of your spending
Documenting your POs and financial paper trail can give you invaluable insights into your small business’s spending and employee needs.
Once you’re able to measure your outgoings each month, you can analyse your purchase orders to:
- Discover how to bulk together purchases to gain valuable seller discounts.
- Determine whether you’ve been sent the right products or services, and understand where miscommunication between you and the seller may have occurred.
- Ensure payments are correct by cross referencing with invoice reference numbers.
- Identify patterns in employee expenditures.
For small businesses, then, purchase orders offer many opportunities to reduce costs and become transparent, helping you understand how to become more efficient and cost-effective.
2. It’s less taxing (literally)
Ah, tax. It’s probably not your favourite Friday afternoon task, but if you put in a little effort, you can end up getting a lot back.
By recording all of your purchase orders thoroughly, you’ll be able to provide the receipts and documentation necessary to request tax reductions on your business and personal expenses. Without proof that your expenditures are necessary, you won’t be able to claim those all-important tax cuts and, unfortunately, you’ll end up spending more.
3. Tackle penny pinchers
Expense fraud can oftentimes go unnoticed. Almost 90 percent of workers say their expense and purchase requests are never challenged or declined. What’s more, 37 percent of these respondents claim that they could get away with a dishonest claim and pocket the extra cash for themselves.
Keeping a meticulous record of purchase order requests, and looking out for patterns in frequency and costs, will help your business tackle expense fraud. Without a seamless process and the right documents to hand, your business could be losing money.
Process is progress
It’s a no brainer: purchase orders can save you money and ensure your business processes are as legal and streamlined as possible. As a result, you’re free to spend more time and money focusing on growing your business.
However, managing purchase orders manually can be gruelling, frustrating work. Errors are made, pieces of paper get lost, or someone decides to throw it away. This makes your financial trail difficult to piece together.
Despite this, only a third of businesses use an automated, digital system for managing POs.
So, before we sign off, here are a few reasons why you should be automating purchase orders:
- Never lose a document again
- Quickly recall files
- Detect fraud by understanding paper trails
- Remove bureaucracy so your employee POs can be approved faster
Take a tour of Turbine’s automated purchase orders tool and see if it could streamline your business processes today.