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Why Automating Your Purchase Order System Will Save You Money

When financial managers were asked about their organization’s purchase order system in a recent survey, a full 43% admitted to major inadequacies in the company’s purchase order (PO) practices.

Even in companies that had a formal purchase order system in place, many reported major inconsistencies, with, for instance, receipts or goods and services not being tallied with the PO until the invoice arrived.

For organizations of all sizes, the management of POs is very often disorganized.

Small firms may simply lack the skilled finance staff to manage a purchase order system; more established businesses may have to deal with a chaotic mix of legacy paper and antiquated monolithic order processing systems and multinational companies need to deal with complexities like import tariffs or even language barriers.

As a result, the purchase order system can very easily break down, leading to a loss of trust in the relationship with suppliers and internal inefficiencies.

Inefficient PO processing costs companies a significant amount of cash in terms of wasted time and manpower. Clearly, this inefficiency is a problem.

So how can we overcome these challenges?

The Causes of Breakdown in Your Purchase Order System

There are myriad reasons why a purchase order system might break down or hit delays. Some of these can be boiled down to human error, while others can be blamed on the process itself.

  • Lack of authorization
    Typically, a named person must ‘sign off’ on a purchase order. If this person does not receive the purchase order to sign off, or forgets to do so, the accounts department will refuse to agree to the PO.
  • Incorrect supplier names and codes
    If the person who completed the purchase order does not know the correct full name of the supplier or their business code, this can lead to break downs. They could write ‘Acme’ in the Supplier Name column, when in fact it should be ‘ACME Ltd.’ – a simple error, but one that could cost hours.
  • Failure to complete all essential columns and boxes
    This is especially a problem with paper POs where the user can’t be reminded by the system that they must fill in certain kinds of information—whether that’s an account code, full names and costs of the goods or services or something as simple as where the delivery must be made.
  • Illegible handwriting
    Again, this is a common problem with paper forms, and requires endless ‘back and forth’.
  • Failure to use the preferred suppliers list
    Many organizations have a preferred supplier list, meaning that if an employee tries to buy from outside this list, the finance team will object to this decision. There may be a perfectly good reason, but this usually needs to be explained and an escalated approval obtained.
  • Seasonal issues
    In some organizations, there are seasonal surges in the number of POs coming through the purchase order system. These can compound other problems and lead to further delays.

Automation is the Solution

Despite the number of potential setbacks, there is a solution: automating the process.

Nintex Workflow can be used to automate your organization’s purchase order process and dramatically reduce these common problems in your PO system. It allows you to fully digitize the completion of purchase orders, and design a workflow which efficiently completes all the necessary steps to ensure the purchase order is always finalized on time.

Let’s see why this is so much better than the ‘traditional’ approach:

Traditional purchase order system Automated purchase order system
  • An employee decides they want to place an order with a supplier


  • They search through the intranet for a form, download it then print it out


  • They scribble in the information they believe is most important then walk over to the finance desk


  • Finance review the document, realize certain key details are missing and have to walk back to the employee and get them to fill this in


  • The employee completes the form again, and the finance team ‘OK’ the order


  • The employee then needs to speak to his boss about the PO and get sign off, but she’s busy and can’t do it right now, so the employee leaves it in her in-tray


  • Two days later, she still hasn’t signed it, and the supplier is calling up the employee asking if they’re good to go
  • An employee decides they want to place an order with a supplier


  • They look in the corporate document management system and complete a digital form on the system, which prompts them to complete all sections of the form before it can be sent for review


  • Finance receive an email notification about the request, review the document, see all is well and can automatically send this to the relevant manager


  • She will then receive email notifications asking her to ‘sign off’ on the document until she completes the action, which usually requires little more than clicking a link from her email inbox


  • Within hours, the PO is processed and with the supplier

By fully automating your purchase order system, you can save yourself countless hours, rapidly speed up the process and save endless ‘back and forth’. This cuts frustration, saves time and minimizes those inconsistencies that so often hold companies back.



Brad Orluk

Brad has been evangelizing technology and process automation for over 15 years. Prior to joining Nintex, he had roles in infrastructure, IT consulting, and most recently, as an Information Architect at a Fortune 500, where he worked on business and IT process improvement and automation on a variety of real world global projects and productivity initiatives. Brad’s unique, technical yet business focused, background gives him the ability to help users leverage technology to drive value to their businesses. Follow Brad on Twitter @BradOrluk

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