For most small businesses, placing an order can be as simple as calling your supplier and requesting goods or services or sending a quick email. But as your business grows, the need to manage purchasing will also grow. One way to keep on top of your purchases is to implement a proper purchase order process – automate and systematise your ordering process and empower your team, without losing control.

One way to keep on top of your purchases is to implement a proper purchase order process – automate and systematise your ordering process and empower your team, without losing control.

Advantages of a POP

There are many benefits of implementing POP, here are

  • the most control and the least manual input by the directors of the business
  • allow the team to place their own orders and be accountable for any spends
  • you will know exactly what’s been ordered, the agreed cost, and when and where it should be delivered
  • all purchase orders are recorded in one centralised system so you don’t need to hunt through those old emails or file directories to find an order
  • repeat orders can easily be generated saving time when re-ordering
  • a POP will highlight orders placed and goods received but not invoiced yet – so you know what bills are missing in your accounts and what cash spends are coming up
  • quickly match incoming invoices to authorised orders and save time with invoice sign off and approval

Purchase Order Processing in Xero

Purchase orders in Xero will allow you to streamline your organisation’s purchasing process. Purchase orders let your suppliers know you want to buy specific goods or services from them. They also define details such as delivery dates and prices.

This 4-minute video will show you the full functionality in Xero. If you are not using Xero, look to your own system to see if offers similar functionality.

User Profiles in Xero

Xero allows users to be set up with restricted access, so if you have team members who you want to be able to access Xero purchasing, sales or both – but you don’t want to give them access to your financials, then this can easily be done in Settings.

Everyone has access to Expense claims but we will cover that in another post!

Xero Restricted User View

What Xero can’t do

If you have set purchase order limits for staff, you will be able to monitor the orders being placed by the members of your team from the Purchase Orders page. You won’t be able to set purchasing limits by a team member in Xero.

Good Business Practice

Once you have decided to implement a purchase order process, make sure all team members are using the process consistently:

  • All purchases that have to be formally ‘ordered’ should have a purchase order – no exceptions
  • Use a common sense reference for each purchase order if you have multiple staff placing orders, if you are managing projects, events or you might need to recharge costs to clients, for example:
    • [Your initials]/[Project/Client]
    • LD/Staff Party

Use Standard PO References

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