How to Digitize and Automate Non-PO Purchases
When business managers need to make a purchase, they often use a regulated purchase process that includes research, comparisons, a bid process, and an approval matrix. When done this way, the process concludes with the creation of a purchase order (PO). The PO document explains the details of the purchase (what was bought, how many, at what price) and a unique ID number. After the purchase order is authorized, it is sent to the supplier who validates it and delivers the goods or services and then submits an invoice for payment. When everything proceeds as it should, the invoice is matched up with the PO by its ID number, and the accounts payable (AP) team is able to confirm the details, see that the purchase was authorized, and easily approve payment of the bill.
Not every purchase a company makes follows this process, however. Some purchases are unique and not in the system, certain transactions need to be handled quickly, and other circumstances arise that don’t allow for the purchase to go through the usual approval processes. In this case, the resultant non-PO purchase results in a non-PO invoice, sometimes called an expense invoice, which must be handled outside the system, and so outside the typical approval workflow. Non-PO invoices may be submitted via email, regular mail, or in person, but whatever the means, these invoices are difficult, if not impossible, to be integrated into the standard purchasing and payment system. Instead, a manual, and often complex and time-consuming workflow is kicked off to get these bills paid.
Automating the PO process
The relatively straightforward process of creating purchase orders and handling corresponding invoices within a procurement system makes it an ideal area for automation. When purchase requests are created within the system, they can be automatically routed and monitored within the workflow, and exceptions can be automatically flagged and escalated. No need for the complex approval matrix system that bogs down so many procurement and AP processes.
When a PO-invoice comes back into the system, intelligent matching technology can quickly and efficiently match invoices with corresponding purchase orders and identify any irregularities. When a properly approved PO is matched with an invoice and verified, even the payment can be automated and the whole process runs smoothly. Once finalized and paid, purchase orders and invoices can be stored in a centralized archive, reducing the potential for missed invoices or duplicate payments, and providing the finance team with informative records.
What about automation for non-PO?
Automating non-PO orders has never been as simple. These purchases must typically be added into the approval workflow manually, and they often move through a complex process that can only begin after the invoice is received from the supplier. To make matters worse, this type of invoice tends to come through the mail, or possibly email, so there is not even the chance of having an API connect the supplier and purchaser’s systems.
This isn’t the only way a non-PO purchase gums up the works. Just because a purchase originates outside of the standard purchasing process doesn’t exempt it from scrutiny - in fact, it may demand even more rigorous investigation. Once a non-PO invoice is received, the accounts payable team often must confirm whether it is from an approved vendor and check the price against comparable products or services already within the system. If any exceptions are found, they are typically handled manually. This can lead to downstream issues, such as late payments or incomplete purchase information, which greatly impacts the finance team’s ability to monitor and analyze the company’s spend and assign purchases to the right cost centers.
Automating non-PO invoice management
On the bright side, technology does exist that can bridge the gap between existing PO systems and non-PO purchases. Exela’s all-in-one Procure-to-Pay solution, for example, is capable of automating even non-PO and non-EDI invoices. For paper, we use high definition scanners and powerful optical character recognition (OCR) and intelligent character recognition (ICR) technology to digitize invoices and extract information. From an email we can skip the scanning and go straight to the data capture. Either way, we then transmit that data into the customer’s approval system, or into our own purchasing and payments platform so that the invoice can be easily approved and paid.
No matter how the purchase was created and no matter how the invoice is received, whether it was through our procurement system, our customer’s, or even a phone call and a mailed bill, every step of the process can be handled seamlessly through one centralized system. Exela even handles the backend investigative work that must be done to confirm the legitimacy of a non-PO invoice and supplement purchasing and payment records. Our system automates approval for purchases from approved vendors and backfills the necessary information to provide better visibility and transparency to improve financial operations.
As with so many other business processes, some operations are fairly straightforward, and maybe even already automated. And then there are the other processes that tend to be messy and complex. From our point of view at Exela, handling PO and non-PO purchases is just another way we work hard behind the scenes to reduce complexity, speed up operations, and provide value to our customers.
