Stop juggling POs: How to streamline purchase order tracking

Keeping track of purchase orders (POs) often feels like a juggling act for finance teams in growing businesses. Between tracking approvals, matching invoices, and keeping spending in check, it’s easy to miss a payment or overspend a budget. Approvals become bottlenecks. POs get lost in the shuffle. And spending threatens to spiral out of control. Each missed deadline or misplaced document adds to a growing sense of overwhelm, making it even harder for the team to maintain control and accuracy.

This article offers a helping hand for finance leaders in growing businesses. We’ll provide clear, actionable guidance on how to track and manage your purchase order process effectively. We’ll explore the options, including manual tracking, procure-to-pay automation software, and leveraging your existing ERP and AP systems. You’ll discover the best approach for your organization and implement practical PO tracking strategies to keep all your balls in the air.

What is PO tracking?

Purchase order tracking lets finance teams monitor and manage POs throughout the procure-to-pay (P2P) workflow. You can use a purchase order tracker to monitor almost every aspect and function of the PO process, including:

• PO lifecycle time: The duration of the entire PO process, from the initial creation of the purchase order to the final vendor payment.
• PO status: The PO’s current position in the procurement process, such as pending, approved, issued, delivered, verified, or paid.
• Spending: How much is being spent on goods and services, spending vs. budget allocations, and spending patterns over time.
• Vendor performance: Metrics like on-time delivery, product quality, and pricing.
• Invoice processing: Assigning POs to invoices, facilitating three-way matching, and tracking partial POs, deliveries, and invoices.

You need a system that captures the relevant information to effectively track these metrics. Let’s look at the specific data a PO tracker can provide.

Data you can track with a purchase order system

A purchase order tracking system centralizes all your procurement data. The data you can track is limited only by the capabilities of the system you use. Here’s a breakdown of the specific details you can track:

Purchase order details

• Purchase order number: The unique identifier for each purchase order.
• Vendor information: The supplier’s name, address, and contact information.
• Order date: The date the purchase order was created.
• Items ordered: Descriptions, quantities, and unit prices for the goods and services.
• Total amount: The total cost of the order and applicable taxes.
• Payment terms: The payment schedule for the order (Net 30, Net 60).
• Delivery date: The expected delivery date.
• Shipping address: Where the order will be delivered.
• Order status: The current stage of the PO (pending, approved, issued, delivered, paid).
• Budget allocation: The relevant general ledger codes (GL codes) or categories for the PO. 
• Requester: The employee or department requesting the purchase.

More advanced tracking systems also let you track performance and processing metrics.

PO processing details

• Purchase order approval history: Who approved the PO, and when they approved it.
• Delivery tracking: The tracking number and current status of the shipment.
• Shipping receipt details: Shipment confirmation, including items received, date, and quantity.
• Invoice details: Invoice number, amount, and date.
• Payment history: Record of payments made to the supplier. 
• Communications: A record of communications related to the PO.
• Performance metrics: KPIs such as PO lifecycle, on-time delivery, invoice lifecycle, and PO error rates.

A purchase order tracking system provides visibility and control over spending, approvals, deliveries, and process performance by centralizing and organizing PO processes. This brings several benefits to your organization.

5 key benefits of using a purchase order tracker

Here are the top 5 benefits of using a PO tracking system in your organization:

1. Cost savings

Maintaining accurate records and having oversight of P2P activities helps your organization avoid losses from duplicate payments, missed discounts, and overspending. Using a PO tracker also helps reduce payroll costs by reducing paperwork and manual tasks.

2. Increased process efficiency

A PO tracking system gives visibility into the status of every PO in your organization. This lets you quickly identify and reduce bottlenecks such as orders stuck in approval queues. With centralized document management, all related documents — POs, receipts, and invoices — are indexed by PO so you can find and access them when needed.

3. Reduced risk

Using a PO tracking system helps you maintain accurate and auditable PO records and enforce internal controls, improving financial transparency and accountability. It also facilitates accurate two- and three-way PO matching, helping reduce fraud and errors and ensuring invoices match what was ordered and delivered.

4. Improved visibility

Track purchase orders through the P2P process to gain insights into spending patterns, budget adherence, and financial commitments. This enhanced visibility improves cash flow management, enables informed decision-making, and ensures compliance with internal policies, contract terms, and regulations for employees and vendors.

5. Enhanced financial control and inventory management

Tracking purchase orders helps you prevent unauthorized purchases, enforce spending limits, and ensure compliance with expense policies. It also lets you optimize stock levels to meet demand, avoid overstocking, and minimize holding costs.

The right PO tracking system brings order to procurement chaos by giving you greater control and financial peace of mind. Let’s look at the different tracking methods you can use to achieve this.

Manual purchase order tracking methods

Many businesses rely on manual purchase order tracking systems using familiar business tools and software. These manual systems typically include a combination of tracking methods:

• Paper-based systems: Storing and organizing paper purchase orders and supporting documentation in physical filing systems such as filing cabinets and folders.
• Purchase order tracking spreadsheets: Entering and tracking PO details in spreadsheet software like Excel or Google Sheets.
• Document management systems: Electronically storing, organizing, and accessing digital copies of POs, invoices, receipts, and other documents.

Pros:

• Simplicity: Manual tracking is easy to understand and implement and requires minimal technical knowledge. For example, an accounting team may already be familiar with Excel and can quickly set up a PO tracker without needing extra training.
• Cost-effective: Organizations can use existing resources or free software to control costs. A growing company could use a free, cloud-based document management system to organize and store POs, minimizing its upfront investment.
• Flexibility: Manual systems can be adapted to accommodate changing business needs without needing rework or complex software solutions. For instance, a marketing department planning a large event can use a color-coded spreadsheet to track POs for various vendors. They can categorize expenses by event phase and assign priority levels to each order to ensure timely delivery and efficient budgeting.

Cons:

• Limited scalability: Manual processes can hinder growth. As the volume and complexity of POs increase, so does the administrative burden of tasks like entering data, updating spreadsheets, and locating documents.
• Risk of error: Manual PO tracking is prone to human error. For example, employees could enter the wrong data in a spreadsheet or forget to log changes, leading to incorrect orders, delivery delays, or missed payments.
• Lack of visibility: Manual tracking creates information silos and delays. Employees can waste time chasing down PO statuses, or critical updates can be delayed if the person maintaining the spreadsheet is out sick or on vacation.

How to use a manual PO tracking system

You can set up a manual PO tracking system using a spreadsheet and shared drive. Start by creating a spreadsheet in Excel or Google Sheets. Add columns for basic PO details like PO number, date, vendor name, and order status. Later, you can add custom columns like shipment dates, tracking numbers, invoice details, and payment status as needed. A free online PO tracking template can help you get started quickly.

Create a centralized document storage system using a shared drive. Use a clear folder structure to organize POs and documents by vendor, department, or date to ensure files are accessible and easy to find.

After setting up your PO tracking system, update your records and documents regularly to keep records current.

Purchase order tracking software

P2P software solutions automate the PO tracking process, replacing manual tracking with a centralized digital tracking system. Platforms such as Coupa or SAP Ariba provide these tracking features:

• Real-time tracking: P2P software lets you monitor order status, delivery dates, and other metrics from a central dashboard.
• Reporting and analytics: Software platforms help you track KPIs, gain insight into spending patterns, and identify cost-saving opportunities.
• Automated purchase order creation: PO software automatically creates purchase orders and purchase requisitions and stores digital copies.

Pros:

• Increased tracking efficiency and accuracy: PO software eliminates slow, error-prone tracking methods. For example, most PO software platforms automatically populate POs with vendor information, reducing the chance of mistakes.
• Improved visibility and compliance: PO tracking platforms provide accurate, real-time data, enabling proactive procurement management and enforcing financial controls. For example, the tracker can flag unauthorized purchases for investigation.
• Better scalability: Digital platforms scale easily to accommodate increasing PO volumes or complexity without adding headcount.

Cons:

• Complexity: Implementing an end-to-end procurement software solution is a major project involving process changes, multiple stakeholders, and IT rework.
• High cost: P2P software can be a significant investment, with high upfront implementation costs and ongoing subscription and licensing fees.
• Integration challenges: Integrating PO tracking software requires careful planning and technical expertise to avoid compatibility issues, data inconsistencies, and workflow interruptions that could impact productivity.

How to get started with PO tracking software

Implementing purchase order software is a significant investment of money and resources. To ensure you choose the right solution for your business, follow these steps:

1. Assess your needs

Identify your purchasing challenges and outline your requirements. Factors to consider include current and future purchasing volumes, ease of integration with existing systems, and budget.

2. Research providers

Look at different PO software solutions and compare features, pricing, and customer reviews. Consider solutions that cater to your industry or business size.

3. Select the best-fit solution

Choose the best solution for your needs and budget. Give priority to key factors like user-friendliness, scalability, and customer support.

4. Begin Implementation and training

Set up an implementation team and work with the software provider to implement the software, migrate your procurement data and processes, and train users.

When is end-to-end automated PO software right for your organization?

Automating PO tracking with an end-to-end procurement automation system is a good step for organizations that have outgrown manual tracking systems. However, an end-to-end solution may not be a perfect fit.

Look for an end-to-end solution if you rely on manual tracking and spreadsheets and see lots of errors and bottlenecks or lack a centralized procurement and invoice processing system. Note that a new tracking system might be redundant if you’ve invested in ERP, accounting, or accounts payable automation software.

Assess whether the potential benefits of an end-to-end solution justify the cost and disruption of integrating a new system with your existing software. If the investment seems too high, consider adapting your existing software or using integrated point solutions to meet your tracking needs.

Leveraging existing systems to track POs

While end-to-end procurement software offers comprehensive PO tracking features, many organizations can leverage their existing systems to track POs effectively. Before investing in a new solution, it’s worth exploring the PO tracking capabilities already present in your ERP or accounting software. You may find your current tools offer features like:

• PO management modules: Most ERP systems include modules for procurement and purchasing. These modules often provide PO tracking, reporting, and analytical capabilities.
• Integrated point solutions: Many third-party procurement and accounts payable software integrations augment your ERP’s functionality with PO tracking features such as three-way matching.
• Automated document management: ERPs usually include advanced automated document management systems to keep POs, invoices, receipts, and other documents organized.

Pros:

• Cost-effective: Leveraging existing resources helps you avoid the expense of purchasing and implementing a new software system.
• Data synchronization: ERPs and accounting systems readily integrate and synchronize data with modules and third-party integrations, reducing information silos and ensuring full visibility and control over PO processes.
• Scalability: ERPs are easily scalable, and with the right modules and integrations, they can support growing PO volumes.

Cons:

• Limited functionality: Existing ERP and accounting systems may lack advanced procurement and supply chain management features found in dedicated purchasing software.
• Customization challenges: Adapting existing systems to support PO tracking may require custom development or rework.
• Potential inconsistencies: If different departments or subsidiaries use different systems for PO tracking, it may lead to data silos and inconsistent tracking.

How to use existing systems to track POs

Connect different systems to enable real-time data sharing and eliminate manual data entry. For example, if you use a separate ERP and accounting system, ensure they are integrated and synchronized to simplify accounting processes. Follow these steps to leverage your existing ERP or accounting systems to track POs:

Assess existing capabilities

Research the purchase order tracking capabilities of your existing software, modules, and integrations. Also, look at your existing procure-to-pay workflows and identify areas where you want to improve PO tracking efficiency. For example, assess whether your existing ERP can associate POs with invoices to simplify PO matching and payment processing.

Consider modular or integrated solutions

If your existing systems lack specific capabilities, consider integrating point solutions. For example, if your ERP can’t automatically process invoices and match them to POs, look to a finance operations solution like Stampli.

Optimize existing workflows

Look for opportunities to streamline or enhance existing PO processes within your current systems or through modules and integrations. For example, Stampli’s AI Line-Level PO Matching and Cognitive AI™ PO Matching features integrate with over 70+ ERPS to let you fully automate often-manual PO matching processes.

By carefully looking at your needs, budget, and current technological assets, you can find the PO tracking system that works best for your business. Now, let’s tie things up by looking at some best practices for PO tracking that you can start using right away.

Best practices for tracking purchase orders

Here are a few things you can do to make PO tracking more efficient for your organization.

Use PO numbers

Have a clear, systematic way of numbering and categorizing purchase orders before you start building a tracking system. It makes tracking and referencing current and past POs much easier.

Set clear PO policies

Document and communicate your PO processes to all stakeholders and vendors. Define approval levels, spending limits, and permitted vendors.

Centralize PO data

Use a single system across the organization to store and manage PO data. Separate systems lead to silos and make it almost impossible to effectively track spending.

Track key metrics

Define KPIs for PO tracking and management. Monitor PO lifecycle times, on-time delivery rates, budget variances, invoice cycles, and PO and invoice error rates.

Regularly review and improve processes

Use all that accurate PO data you’re collecting to identify bottlenecks and improve performance.

Unlock complete PO visibility with Stampli

Effectively tracking and managing POs requires end-to-end process efficiency and visibility. Stampli gives you the tools you need to leverage your existing systems and gain complete control and visibility over your entire PO process.

Optimize invoice processing and PO matching with Stampli’s industry-standard AP automation solution. With prebuilt integrations supporting the full functionality of over 70 ERPs and accounting systems, Stampli augments your ERP’s PO tracking capabilities without compromising its performance.

Gain total control over two- and three-way matching with Stampli’s AI Line-Level PO Matching and Cognitive AI for PO Matching — evolutionary purchase order management features that let you fully automate PO and invoice verification.

Don’t drop another ball. Contact us today and start optimizing your procurement processes with Stampli.