Purchase order (PO) tracking involves monitoring and tracking changes to purchase orders from the time they’re created and sent to vendors through acknowledgment, fulfillment, shipping, and receipt.
Some companies go even further and track POs through payment — monitor when vendors send invoices and when invoices are matched, approved, and paid.
There are a few methods — automatic and manual — to track POs.
- Manual methods like spreadsheets could work for teams managing only a few purchases and minimal monthly spending. However, most teams eventually outgrow these solutions, as they become challenging to manage, eat up time, and are prone to human error.
- Purchase order software has tools to track POs automatically. Most teams find this software necessary once they manage dozens of orders a month, work with vendors, or have people in multiple offices placing orders. These tools provide a central hub to manage purchasing, maintain organization, and prevent wasted time on tedious bookkeeping.
Below, we’ll cover how automated PO tracking works and review two manual methods so you can decide what’s best for your organization.
ProcureDesk is a full procure-to-pay system, which means our platform manages purchasing processes and accounts payable workflows so you can track POs all the way through payment. We’re a popular tool for small and growing teams, and we offer custom enterprise packages to support scalability.
The Purchasing Process & PO Tracking in ProcureDesk
Purchase order software like ProcureDesk centralizes all purchasing activities and optimizes the procurement process.
ProcureDesk lets you:
- Create a controlled shopping environment so other team members can shop at their convenience (within your approved budgets and guidelines).
- Streamline purchase request management; our system can check purchases for you, manage simple approvals or rejections, and then route requests to the right person(s) for review.
- Convert approved PRs to POs and send them to vendors automatically.
- See real-time PO status throughout the entire lifecycle — track when vendors acknowledge POs, when orders are fulfilled and shipped, when they’re received, and their condition. Plus, ProcureDesk grants purchasers this same visibility, so they don’t have to email procurement managers for updates.
- Track real-time spending and report on purchasing patterns.
Our P2P system combines purchasing and AP software so you can track POs through payment.
Our suite of AP tools lets accounts payable teams receive all invoices in one place, automatically match invoices to POs and receipts, and send payments quickly. Everyone (procurement, AP teams, and purchasers) can see when orders are verified, paid, and closed out.
You can choose the purchasing or full P2P package and upgrade plans anytime. We offer a free one-on-one demo, a 14-day trial to explore our platform, and complimentary white-glove onboarding to support adoption.
In the following sections, we’ll show you how the above-mentioned steps work in ProcureDesk so you can see how our system lets you keep track of purchase orders and spending.
Create a Controlled Shopping Environment & Automate Approvals
ProcureDesk lets procurement managers create a central, collaborative hub where everyone in the organization can shop. We guide this setup during onboarding so that ProcureDesk is configured to your business needs and specifications.
Here are the steps:
- Connect with approved vendors. ProcureDesk integrates with 150+ vendor sites, so you can add punchout catalogs and create custom catalogs.
- Set budgets for proactive spend control. Specify spend limits by vendor, product category, department, project, or individual. There are several ways to control employee spending, and you can update budgets as you learn more about your team’s spending patterns.
- Create purchase request (PR) forms. ProcureDesk automatically prompts employees to provide more information about orders so managers have all the details to approve (or deny) purchases.
- Specify purchasing and approval rules. Our system automatically reviews orders to approve, reject, or route PRs to certain team members for a final look. Then, we provide omnichannel approval tools so managers can review and respond to PRs promptly.
Employees can log in to ProcureDesk and:
- See exactly who they can shop with and how much they’re allowed to spend.
- Shop vendor sites in a familiar interface and add items to their shopping cart.
- Submit orders for review and send PR forms in the same way they’d complete checkout.
Then, they can see what happens to PRs (if they’re approved or denied and when they’re submitted to vendors) and track orders until they hit their desks — and are paid.
Watch the quick video below to see the flow:
After purchase request forms are approved, ProcureDesk converts the PR to a PO and automatically sends the purchase order to the vendor. Automated purchase order creation saves managers from manual data entry and prevents bottlenecks at this last step.
This is where the PO tracking process begins.
All POs are displayed in the ProcureDesk dashboard so managers can see the most recent orders and real-time spending.
Vendor Acknowledgements
ProcureDesk also offers simple tools for vendors to respond to POs and provide updates in our system.
When vendors receive POs, they can mark them as “acknowledged.”
Then, vendors can communicate with procurement managers directly on POs if they cannot fulfill orders, expect delays, or need to discuss any other issues.
Vendors can also add expected ship dates and mark when orders are fulfilled and sent. Then, they can share tracking numbers, and managers can add these to POs so everyone can monitor orders until they arrive.
All communications are stored in the PO so purchasers can check the current order status and managers can reference past conversations.
Change Tracking
Now, PO tracking isn’t always straightforward — it’s fairly common for POs to require adjustments, either because purchasers want to make changes or managers have to modify orders with vendors.
For example, you would update a PO when:
- You swap, change, or remove a product — perhaps the item you purchased is no longer available, or the purchaser ordered the wrong version of a product and wants to correct their order before fulfillment.
- You adjust an item’s quantity.
- Pricing changes, and you need to adjust POs to match current rates.
Depending on your size and budget, PO changes could have significant impacts, so having another set of eyes on them — and a historical record of why and when changes took place — can prevent major blunders.
It’s best practice to have a secondary purchase order approval workflow for PO changes because it:
- Improves purchasing compliance.
- Prevents fraud.
- Grants an opportunity to review the specific details of change requests, assess their impacts, and determine whether changes resolve issues.
For example, let’s say you’re the procurement manager at a research laboratory. You approved an employee order for one $12K humidity chamber, but the chosen chamber is currently back-ordered. The vendor suggests an alternative they have in stock, but it’s an additional $3K.
You don’t want the original purchaser to be the one greenlighting this change, and you probably don’t want to leave this purchasing decision in the hands of one person.
A backup approval flow gives you a window to review the proposed changes, ensure the alternative humidity chamber meets your requirements, check that this change doesn’t push you over budget, and decide whether to approve the change.
We’ll help you set approval flows for PO changes during onboarding and show you how that flow works. Our system tracks changes in the original PO so you can see the entire history.
Receipt Management
Purchase order systems with receipt management let users track delivery dates and share details like serial numbers and order conditions. Receipts are stored with POs for easy reference.
ProcureDesk notifies users to upload photos of receipts after they receive orders (our system knows when to send these notifications based on the tracking number).
Managers can add custom fields to the receipt details form to gather specific purchase information. This is commonly used to record if orders contain mismatched quantities or damaged products.
If users forget to upload receipts after the first notification, our system sends email reminders.
With ProcureDesk, managers have all the necessary order details to rectify order issues with vendors or reconcile invoices for payment.
Tracking POs Through Payment
On the topic of reconciling invoices — ProcureDesk has the tools to manage accounts payable processes and track POs through payment.
We’ll briefly show ProcureDesk’s key features to support the invoice approval workflow:
- Accounts payable teams can receive invoices via e-invoicing, vendor portal, or email (our system also allows users to upload paper invoices to manage all vendor invoices in one place). Our system records the dates you receive invoices, so you can always reference those and know when payments are due.
- ProcureDesk uses optical character recognition (OCR) to extract essential data from invoices — like PO numbers and line items — and match them with their corresponding POs and receipts.
- Our system will flag any invoices with discrepancies or matching problems and route them to a member of the AP team for troubleshooting.
- It can automatically push approved invoices to your accounting system or ERP to prepare payment (or route approved invoices to a manager for a final look).
- After payment is sent, AP teams can update the invoice status in ProcureDesk and complete the workflow. All users can see invoice statuses in real-time to know when purchases are verified and paid.
ProcureDesk integrates with popular accounting software such as QuickBooks, NetSuite, Sage, Dynamic 365, and Xero along with software solutions like Bill.com.
Final Thoughts
To recap, ProcureDesk’s PO tracking system lets you:
- Control purchasing and streamline PR reviews.
- Automate PO creation and keep a record of when POs were generated and sent.
- Check PO status after POs are sent to vendors and keep referenceable communications of all order issues and PO changes.
- Monitor purchases through fulfillment, shipment, and delivery.
- Track purchase receipts and store them with POs. Share any details about orders so procurement and AP teams have context for troubleshooting issues or verifying payments.
- Receive and reconcile invoices, prep invoices for payment, and monitor real-time invoice status to track POs through payment.
Our system saves time and lets you avoid the potential problems that arise with manual processes (like not having visibility into PO status once POs are sent to vendors, plugging in the wrong data in spreadsheets, forgetting to update spreadsheets in a timely fashion, forgetting to log changes, not having an organized way to manage receipts, etc.).
Purchase order systems are the next step for teams once they’ve outgrown manual methods. We recommend these tools when you:
- Process a high volume of purchases every month.
- Work directly with vendors and need better tools to manage those conversations and relationships.
- Need greater order visibility and cost control.
- Merely want tools to streamline processes.
Alternative PO Tracking Methods
In the following few sections, we’ll review two manual methods for tracking purchase orders. These methods might work for small businesses with a low purchasing volume, but again, they will not be sustainable as you scale.
Spreadsheets (Google Sheets, Excel)
The first option is, of course, a spreadsheet.
You might want to use spreadsheets when you have:
- Low purchase order volume: If you create fewer than ten purchase orders a month, tracking them in a spreadsheet is a viable option.
- Limited changes to the purchase orders: If you rarely deal with purchase order changes, spreadsheets might be a good option, as tracking updates to POs can become messy.
- Limited order cancellation: On that same note — tracking cancellations in spreadsheets is tedious. But this isn’t such an issue if you don’t frequently cancel POs after sending.
- One or two people tracking orders: Spreadsheets become messy when you have multiple cooks in the kitchen, but if you only have a couple of people with access to update sheets, there are fewer chances of incorrect data entry.
How to Do It
Create a simple spreadsheet via Google Sheets or Excel that your team can easily maintain. You need only some basic information to get started, such as the order number, date, supplier name, and order status.
You can download our free purchase order tracking template by clicking the button above.
From there, you can add custom columns to track POs and their details (e.g., shipment dates, tracking numbers, order conditions, invoice and payment status)
Pro tip: It helps to establish a clear, systemic method for numbering, categorizing, and filing orders before you start building and working in spreadsheets. Having a rhyme or reason to order numbers makes tracking POs and referencing past orders easier. You can choose the method that best suits your business’s workflow.
After you’re up and running, update spreadsheets regularly and promptly so other users with access can see the most current details. Staying on top of spreadsheets ensures accuracy, gives timely awareness of any delays or order issues, and prevents double work and other blunders.
Pros
- Spreadsheets are free, and most people already know how to use them. Google Sheets is free and available to anyone with a Google account. Microsoft Excel offers a limited free plan, or you can access the tool for free with a Microsoft Office License.
- Spreadsheets don’t require significant process changes or investments; you just need an individual or (small) team to track POs and manage spreadsheets.
Cons
- Spreadsheets become challenging to maintain and are prone to human errors. PO status is ever-changing, so those responsible for updating sheets must constantly check for changes and record them as they arise.
- People can forget to update spreadsheets. Or, say you only have one person in charge of this task, and they’re out sick or on vacation; the sheet will sit stagnant until they return and can make changes.
- Though actual spreadsheet tools are free, there’s still a cost to manage this process. Let’s say one person spends two hours updating the PO tracker every day — that adds up to 10 hours a week (40 hours a month). If this person makes $40/hour, you’re spending $400/week ($1600/month — or $19.2K/year) to maintain your “free” purchase order tracker.
QuickBooks (Or Other Accounting Software)
You could also track purchase orders with your existing accounting software.
We use QuickBooks Online here, but you could replace it with Sage, Xero, NetSuite, or any other system that supports purchase orders.
Using your accounting system as a purchase order tracking system is feasible. However, there are certain limitations. This approach is best suited for companies with:
- Low purchase volume: This strategy could work if you’re processing fewer than 20 monthly orders.
- Predictable life cycle and simple inventory management: As mentioned in the spreadsheets above, if you find POs rarely require changes (aka, the PO lifecycle is mostly predictable), then this approach may be manageable for you. The fewer changes within the purchase order process, the less you have to adjust in QuickBooks.
- Limited products or service purchases: If your teams only purchase a small set of items, you can easily create a “catalog” in QuickBooks by adding those items to the item master. Then, you can add items to POs instead of manually typing line items and descriptions; this speeds up the process and reduces errors while creating POs.
- A single person in the procurement team creating purchase orders: Aside from the messiness of having multiple people involved here, QuickBooks requires you to grant software access to everyone entering purchase orders — but QuickBooks doesn’t have a way to restrict access to just PO functionalities, so you have to open up your books to each user involved in PO tracking. And this is not a smart move for obvious reasons.
How to Do It
First, create a simple requisition form for employees to submit purchase requests.
Then, you need to establish and share a purchase approval process so employees know where to submit forms and management has an opportunity to review purchases and expenses.
We recommend creating a purchasing email for employees to submit purchase requisition forms to management for review (e.g., purchasing@yourcompany.com).
Next, you should assign a single person on your procurement team the responsibility of creating purchase orders in QuickBooks. This person can field all approved requests and manually build the PO in QuickBooks.
Then, QuickBooks offers an email functionality to send vendors POs directly from the system. (We also recommend sending the requester a copy of the PO so they know purchases were sent.)
Afterwards, you can see all POs in QuickBooks. However, it’s worth noting: you can’t use this method to track POs through the entire lifecycle without supplementing QuickBooks with a spreadsheet and emailing vendors for updates through fulfillment and delivery.
However, because QuickBooks is an accounting software, you can track when POs are reconciled with invoices and paid.
Pros
- The process is simple for employees who are already familiar with QuickBooks. They don’t need to adopt or learn a new system.
- With that, you can avoid the expense of purchasing separate PO tracking software or spreadsheets. Since you are already paying for QuickBooks, you can use the native capabilities for no additional charge.
Cons
- The requesters have to keep track of their individual purchase orders and don’t have visibility into PO tracking as they don’t have access to QuickBooks.
- The process limits visibility — as QuickBooks doesn’t offer vendor management tools to simplify those conversations — and doesn’t scale with volume.
- This process is time-consuming and error-prone. Purchase requisition forms can pile up, and it’s not uncommon for PRs to get lost in the shuffle or for employees to forget to create POs and send those off.
Choose the Best PO Tracking Method
We’ve been working with procurement and AP teams for over five years and have found that the great majority of teams outgrow manual PO tracking methods. Chances are, if you’re doing this research for tips to improve processes, you’re likely at that point.
Purchase order tracking software offers countless benefits for growing teams — it maintains organization, saves time, grants visibility into the entire PO lifecycle, and avoids the potential challenges and errors discussed with manual processes.
Though PO tracking software requires an initial investment, the couple hundred dollars you spend on this software every month can save you hours each week and afford your teams the time for more valuable tasks (spend analysis, working with vendors to secure contracts, renegotiating vendor contracts for better rates or payment terms..).
Looking back at our math above, you can see how this software quickly pays for itself.
