Purchase Order Approval Best Practices

Step 1: Map your organization’s current workflow processes for Purchase Order Approval

🗸 Identify the flow of purchase orders through current system and processes

– Are there disconnects?

– Are there manual steps bridging gaps in technology?

🗸 Review primary and secondary approvers and authority limits

🗸 Evaluate current internal controls against audit checks

Step 2: Build your new workflow to create a seamless, automated Purchase Order Approval process

🗸 Eliminate gaps and workarounds

🗸 Determine who can place orders for all standard products and supplies

🗸 Identify staff members who can approve orders

– Remember, multiple approver levels and check points help reduce fraud

🗸 Drive all POs through your new approval process to ensure spend is well-managed

🗸 Set-up steps to monitor and review non-standard purchases

🗸 Validate your refreshed processes for consistency with audit requirements

Step 3: Leverage technology to streamline approval process

🗸 Create an enterprise-wide formulary of standard products, which will in turn, streamline approvals

– A well-designed formulary makes exceptions more visible, increases product standardization and drives cost savings

🗸 Combine people, process and technology for workflow to seamlessly create, approve, send, receive orders

– Pave the way for automated AP matching

Step 4: Set up users with proper security, roles and responsibilities

🗸 Establish clear roles and responsibilities

– Identify buyers who can requisition and/or order approved products

– Identify managers who can approve orders, make and authorize exceptions or changes

Step 5: Identify the process to manage non-file items

🗸 Identify people in your organization who can manage requests for non-standard products and supplies

🗸 Implement a review process to determine when a non-file item should be moved onto contract, or added to your approved product formulary

Step 6: Actively manage purchase orders

🗸 Validate orders against your standard formulary to ensure

– Best contract price utilized

– Product quality is maintained

🗸 Ensure visibility to overall ordering and spend for planning and management

– Compare spend to department budgets

🗸 Implement reporting tools and steps needed to measure improvement in contract utilization; product standardization; overall spend

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