Procurement automation
- Net saving a month after the software
- $4,195
- Hours a month on payables today
- 220
- What that costs a month
- $7,040
Every figure here comes from the figures you enter and the method stated beside it: your invoice volume, your team's hourly cost, your own purchase-order coverage and your own tolerance. Where a worksheet uses a published constant it names the source and the date it was read. This site publishes no accounting treatment, no tax position and no audit opinion; what a transaction should be booked as is your accountant's and your auditor's.
Procurement automation, for a payables team, means the front half of purchase to pay: the requisition somebody raises, the approval it needs, and the purchase order that results. It matters to AP because an invoice with a matching order behind it can be processed without a person, and an invoice with no order cannot. Most of what looks like an invoice problem started as a missing purchase order.
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Requisition before the spend
The person who wants something raises a requisition with what, how much and which budget. Doing this before the commitment is what makes the rest possible, and it is the habit that takes the longest to establish.
Approve against the budget
The requisition goes to whoever owns that budget, under the same kind of rule that governs invoice approval. Approving the commitment rather than the invoice is the difference between controlling spend and recording it.
Issue the order the invoice will match
An approved requisition becomes a purchase order sent to the supplier and held for matching. When the invoice arrives it has something to be matched against, which is the whole reason payables cares about this half.
Procurement automation: common questions
Why does AP care about purchase orders? Because an invoice with a matching order and receipt can post without a person, and one without an order cannot be matched at all. Your PO coverage rate is the ceiling on how much of payables can ever run itself.
What is the difference between a requisition and a purchase order? A requisition is an internal request to buy, which gets approved. A purchase order is what goes to the supplier once it has been. The requisition is where the control sits; the order is what the invoice matches against.
How do you get people to raise requisitions first? Usually by making no-PO invoices visibly somebody's problem rather than AP's. When an invoice with no order goes back to the requester to explain rather than being absorbed by finance, PO coverage improves quickly.
Will it do what you need for Procurement automation?
Tell us how your payables process runs today and what you are trying to get out of it.