If you are like most small businesses and startups, you work as a small team and collaborate with a few trusted suppliers. Even though you may know your suppliers well, you should still establish a system of using purchase orders (PO) for purchasing items. A PO is a formal document that can be referred to in cases of payment disputes or quality problems.
Once you are using POs regularly, the next step is to invest in an order management software that allows you to manage POs and other aspects of fulfillment such as tracking orders and expenses, resupplying stock and updating inventory. Read on to learn more about POs and Cin7’s automated order management system.
What is a purchase order (PO)?
A purchase order (PO) is a formal document issued by the buyer and sent to the seller listing all the required goods/services in desired quantities. The seller verifies the PO, delivers the goods to the buyer, and sends an invoice for the completed order. Thus, a PO acts as a legally binding document for buyers and sellers, as both parties can track the ordered items.
Ideally, a PO lists all the required items, their types, quantity, and prices in detail. This is important in case there are problems with the order. For example, if you order 15 printers and the vendor has only sent 14, you will have the PO for validating your order. On the flip side, POs are quite essential for sellers too, as POs will act as proof for the order placed by the buyer. For instance, if a buyer argues about the order quantity, the seller can always hand over the PO to the buyer. It’s a win-win for both parties.
What is a PO number?
A PO number is a unique number assigned to every PO. A PO number can help both buyers and sellers track the goods or transactions. In fact, it acts as a quick reference code for businesses to verify orders.
For instance, if a customer has a query and contacts your office, anyone from your accounts department can check their order just by entering the PO number. Businesses often use the PO number to validate the invoice against the purchase order for any mismatch.
What is a PO system & how does it work?
A PO system helps businesses create POs effortlessly and digitally.. All you need is to fill up your goods requirements in the desired amount and enter the supplier details. The system generates the PO with a unique PO number and sends it to the supplier instantly.
The PO system streamlines the entire order management process, including purchase requisition, supplier approval, receiving goods, getting invoices, and closing the payment. In short, a PO system is not only about purchase orders but also simplifies all the processes associated with order fulfillment. Furthermore, the PO system maintains the entire business transaction record that both parties can quickly refer to. Thus, businesses can track their orders, view order histories, keep their budget in control, and buy the right amount of stock.
A PO system is essential for any product-based business, regardless of size, as it manages inventory, purchases, orders, and invoices daily. Since the PO system aids transparency and accuracy in managing orders, you will have perfect inventory control, knowing what to stock and what to cut down on.
Why should small businesses invest in a PO system like Cin7?
Creating manual POs, maintaining spreadsheets, and following up with suppliers over the phone can be time-consuming and energy-draining. Cin7’s Order Management System offers significant benefits to your business.
1. Save time
Cin7’s OMS saves a lot of your time by simplifying purchasing processes and minimizing manual data entry. You can save the supplier details once and directly send your item list rather than manually entering the supplier details every time. You can readily refer to all the order details and transactions in the PO system. Plus, your employees need not spend time on calculations as the system does it accurately.
2. Gain better control over business processes
Cin7’s order management system is highly transparent, allowing you to view all the business activities in real-time. Hence, as a business owner, you can make data-driven business decisions. For instance, you can compare all the suppliers, their rates, quality, and sales movements. Thus, you can negotiate better deals with the suppliers while delighting your customers with beneficial products that add value to them.
3. Prevent overstocking and understocking of goods
Understocking goods can affect your reputation while overstocking items can dent your profits. With Cin7’s order management system, you can maintain optimal inventory levels at all times. You can automate the system to send POs to suppliers when inventory falls behind certain limits. Can replenishing goods get any easier? Thus, you can ensure you have the right amount of goods at the right places.
Summing up
Giving your employees a feature-packed tool like Cin7s order management system will allow them to work more efficiently as the software streamlines the entire backend process of managing orders. Additionally, Cin7 integrates with accounting software like Quickbooks and Xero, and you can import all your business data into it and keep track of your business’s finances. Thus, you can gain real-time insights into your business and intervene earlier to grow your business faster. Talk to Cin7 experts today to learn more about Cin7’s features and functionalities.
