82% of small businesses fail due to bad cash flow management, often due to mismanaged spending.
Studies show that for 80% of SMEs, these spending mistakes can be addressed (and even prevented) by using a purchase order system.
With the right PO system for small businesses, you can save a lot of resources and time while also equipping yourself with a powerful tool to empower your business.
Find out what other incredible benefits a PO system can offer your small business in this article.
A purchase order (PO) is a formal document between a buyer and a supplier created when an order for goods/services is being placed.
It is issued by the buyer to the supplier and contains important information about the unique order being placed. It typically includes information like:
Once the supplier accepts the purchase order, it becomes a legal contract between the buyer and seller.
Some businesses rely on paper to create their physical purchase orders. But written and printed paper both have their downsides. That’s why today, more companies are shifting towards a PO system for small businesses.
A Purchase Order System (or PO System) is an electronic system that automates a variety of procurement tasks, right from order requisition to vendor payment.
With the help of a PO system, you can easily customize PO templates and send hundreds of purchase orders within moments.
As a small business that needs to compete with larger and more established competitors, having a detailed and transparent purchase order can help you have smooth and efficient backend operations.
An incorrectly-made PO can create problems in your day-to-day operations, impact how you serve customers, and also affect your brand image.
Additionally, considering how PO costs typically vary between ₹500 to ₹85,000 across industries, any mistake in your purchase orders can result in tremendous financial loss. This can be particularly challenging for a small company.
A PO system for your small businesses can help you:
In this way, a PO system for small businesses can automate PO creation and processing. Through this, it can save a lot of time for the company by reducing manual work.
Additionally, by improving the accuracy of POs, it can also reduce expenses that arise out of faulty purchase orders.
A purchase order system is effective only when it suits your small business's bespoke needs. The steps your business should follow when creating a PO system are as follows.
The industry and business niche your small business operates out of will have a significant impact on the type of purchases you will make.
It’s important to understand who your customers are and what they want from you. That will tell you what products or services you might need to order frequently and/or sporadically to serve your customers well.
You’ll also need to take into consideration factors like changing fashions/fads/trends and how this affects what you need to order and the terms of the order.
Finally, you need to check how changes in your industry/niche affect technological evolution across the supply chain since this, too, can affect your B2B purchasing process.
Next, map out projections for your business and identify what yearly, quarterly and monthly purchases you may have. These decisions will help you estimate a budget for your business purchases.
You can then know when to invest in a purchase order system so that you can be equipped with a powerful tool to help you manage your growing procurement needs.
Purchasing policies are rules that you set for your small business to govern the processes from order requisition to vendor payment.
Ultimately, the PO system you choose will actively implement these purchasing policies. So, it is important that you set these policies with clarity, keeping in mind your present and future business needs.
If you already have purchasing policies in place, then you can also consider what revisions you can make to them so that they have the best impact on your business after PO system implementation.
An e-procurement tool or software is a digital PO system for small businesses that can help you automate and manage the entire business purchasing process.
While some tools need some technical knowledge to implement, other platforms like Hubler need zero/low coding and can be effortlessly implemented within moments.
Customizable templates with lots of add-on elements can make building bespoke POs very easy every time.
Plus, the flexibility and versatility of such a PO system can enable you to easily integrate the new platform with any existing order requisitioning system you have.
Since tools like Hubler are hosted on the cloud, you won’t need to worry about scalability either since the PO system can grow along with your business.
PO systems use smart technology to help you place orders, track inventory, re-order, set reminders for payment, approve specific tasks automatically based on triggers, and more.
To ensure the PO system can support the needs of your small business, it is important to set the rules according to which the automation needs to work.
Updating, revising, and adding new rules can make the PO automation smarter and more intuitive to your needs. This can make purchase order management faster, more efficient, and less expensive.
It is only when your team knows how to use the PO system that the tool actually helps your purchasing operations.
Many companies have detailed resources where you can learn how to use various features of PO systems for small businesses.
You can even schedule a live training session with the PO system company to help your staff get acquainted with the platform.
So, what are the top features of a PO system for small businesses? Well, here are some of the features to look for when vetting various PO platform brands:
A template library that allows you to customize how each purchase order looks and what details it contains is very important.
Having pre-built templates that are editable can also be very beneficial for small businesses that want to maintain some consistency in the aesthetic/design of the PO they send suppliers.
Manually filling in all details of the PO can be cumbersome and time-consuming. Having an auto-fill feature ensures the PO system smartly tracks which details to populate in the fields based on the specific suppliers or orders.
This feature is incredibly important when you have a centralized PO system for your company which staff across departments use.
Your team can request for purchase and allocation of resources by sending your procurement team their PO request.
Often, this feature will allow the company to directly submit this PO request to multiple vendors to solicit quotes from them.
PO systems that can be integrated into existing asset and inventory management systems or which can track inventory based on previous orders can be very helpful.
Your business will be able to manage diverse assets/products using a single dashboard on the tool. Timely re-ordering can help you serve your customers well.
Additionally, the inventory tracking feature also helps your company know what product types and quantities will be delivered soon. That way, you can plan your purchases smartly and save a pretty penny.
Supporting the inventory tracking feature are automated reminders.
PO systems that remind the business about low inventory levels or about upcoming lease renewals can ensure the company orders what they need on time, every time.
Another feature that is necessary for a PO system for small businesses is automatic approvals. Here, specific tasks will be approved and completed on the performance of other tasks, which act as triggers.
For example, the purchase order is automatically approved and submitted to the supplier when certain pre-determined actions/steps are performed by different stakeholders.
Any regular orders made by your business to a specific vendor can be easily automated to ensure more efficient purchasing.
The purchase order tracking feature will enable you to monitor the status of your PO. You will know when to expect the delivery, what stage of shipping the order is in, if there are any delays, or if the order is canceled.
A robust vendor list management feature is a must in any PO system for small businesses. This feature will allow companies to add and remove approved vendors from their list.
PO terms, payment settings, quality control, feedback provision, etc., can all be controlled through this feature.
This feature will also enable your company to exchange quotations, set discounts/offers, select shipping terms, set payment cycles, upload payment details, and more.
A lease management feature will send reminders to you if any equipment/tools that you have leased requires a renewal. Now you can ensure you always adhere to lease/rental agreements and maintain positive relations with your vendors.
Finance and accounting integrations will allow your company to do various tasks with ease.
For one, you can check the cash balance in your PO platform wallet and easily transfer money from your designated bank account into the system.
These integrations will enable the finance and accounts department to work together to set budgets for purchasing and manage cash flows.
An expense management integration will allow you to consolidate bills based on vendors, time periods, product types, and more, minimizing any unwarranted expenses.
Finally, integrations with accounts payable software can help small businesses take advantage of vendor-specific payment cycles and make timely payments to all vendors.
Speaking of payments, the PO system for small businesses should support procure-to-pay solutions and help you manage all payments from the platform itself.
For example, features like one-click PO generation, PO/delivery slip/invoice matching, GRN releases, data encryption, 2FA, multi-mode payment, multi-currency processing, direct payment links, fraud identification and management, and multi-device optimization are incredibly helpful.
Your needs may change between the time you submitted your PO to the vendor and the time the order was processed.
Having an order revision/cancellation feature can allow you to seamlessly recall, edit and re-submit or permanently recall POs within a mutually-determined duration.
These days, procurement teams don’t just manage POs on their desktops. Many companies work remotely, and your PO system will need to be optimized for mobiles and tablets alike.
Having optimized dashboards and enabling order notifications can help your team to keep a close watch on every order. They can take necessary steps quickly to ensure they receive their order on time.
Having an on-platform help desk that is either chatbot-managed or human-managed can allow all users of the PO system to seek help whenever needed.
Multiple service requests coming from across channels can be easily addressed. Tickets can be escalated based on priority and severity. Plus, ticket raisers can be notified across devices about solutions.
The purchase order analytics and reporting feature are incredibly helpful in monitoring how a company procures its necessities across a period of time.
This reporting feature can show the most-bought products, higher/lowest prices paid, number of discounts availed, order frequency, months with highest/lowest orders, instances of fraudulent transactions, and more.
All of this data can help your small business make mindful procurement decisions that lower costs while supporting business objectives.
Having a paper printing feature available can help your company if you need to send out physical invoices.
A PO system can offer tremendous benefits for a company. Here is how a PO system can help you. It can:
Choosing the correct PO system is especially important to ensure it works well for your firm. Here are a few steps to follow when purchasing a PO system for your business:
Hubler's intuitive PO system is designed for start-ups and SMEs that are looking for customizable solutions. Our PO system supports your need for dynamic growth by offering world-class features at reasonable prices.
Hubler's PO system is a plug-and-play platform that is hosted on the cloud. Its scalable, custom contract management feature ensures you always have exactly what you need to fulfill your diverse B2B purchase needs.
Our platform can be easily integrated with multiple software, allowing you to manage cross-departmental operations with ease. The social tool enables easy communication and collaboration between team members.
You can now build a bespoke PO solution that offers the most personalized experience to vendors across devices. Schedule your demo today.