If you’re a QuickBooks user (Desktop or Online version) inside or outside the United States struggling to scale your current procurement process- you’re not alone.

Before using ProcureDesk, many of our customers had a common problem – they were all struggling with scaling a manual purchasing process and were looking for ways to make the procurement/purchasing process more efficient.

This blog aims to help you understand how to scale your current procurement process fully. Whatever subscription you may be in QuickBooks (active subscription, monthly subscription, base subscription, or add-on subscription), don’t hesitate to read along!

This blog post is specifically written for finance and purchasing managers to understand how utilizing the right tools in any company event, such as money movement services and industry-specific editions, can bring better financial reports and peace of mind.

We will walk you through a step-by-step process for transitioning a manual, error-prone purchasing process to a fully automated and seamless one. We will also provide some practical tips you can implement today to make the process more efficient, including application approval and hours without notice. The goal is establishing a purchasing process before investing in a purchasing automation tool.

What we will not cover is an overview of the ProcureDesk purchasing system. Feel free to register for a ProcureDesk tool demo if you need that.

So grab a drink of your choice, and let’s get started!

What Is Purchasing Automation?

5 Steps To Purchasing Automation

Now let’s look at the 5 key steps which transform your procurement process from being unpredictable to a well-oiled machine.

Set Up A Basic Purchasing Policy

The first and foremost step is setting up a purchasing policy. If you don’t have a purchasing policyas a part of your priority circle, we highly recommend reading “Setting up a purchasing policy for your company.”

Here are the key steps you need to take to set up a purchasing policy.

First, analyze your spending data for the last 12 months to understand purchasing patterns. What do you buy? What is the typical order/invoice amount?

You most likely won’t have purchase order data, which is fine.

Export all the Bills from QuickBooks Payments into a spreadsheet; you can do your analysis there.

There are a couple of reasons why this analysis is required

a) You must understand your key spending categories to address that in your purchasing policy, whether by credit or an eligible debit card. For example, you realize employees are charging a prime membership fee for Amazon Business when you already have a corporate credit card.

In that case, your policy should clearly define whether you allow that.

Let’s say there is another case where you saw a lot of purchases for snacks and bars for the office kitchen. If that is your policy, then that is great. If not, then that should be stopped.

The purpose of the policy is to provide guidelines, and you can only define guidelines when you know what is being purchased by your employees.

b) In case you are using purchase orders, then you should be able to identify what Spend is already going through purchase orders.

For example, Suppose your goal is to increase spending visibility. In that case, you need to know what process change needs to be communicated to the employees so that they can create purchase orders instead of just sending invoices for processing.

You might consider setting up a No PO, No Pay policy to reduce the number of invoices without a purchase order. In our experience, that happens over some time.

Setting up a no PO, no Pay policy right upfront may drive a lot of noise in the system. So start with minimal changes and then changes policies over time.

Set Up A Purchase Order Process.

After you set up the purchasing policy, the next step is to set up a purchase order process.

Most companies already have a purchase order process, so why do we mention it here?

It is worth reviewing the current process to assess what is working and what needs to be changed

Here are a couple of suggestions

a) Review the purchase process for key categories

You should review how the end-users create and submit the purchase order requests. Here the focus is not just on automation but also on what items are being purchased.

Let’s take an example of office supplies.

For office supplies, your employees might be purchasing them from Amazon.com or sites like Staples.com. Let’s pick staples.com for now.

Each employee might have a separate account, they use their credentials to log in, and of course, there is no way for you to consolidate all the purchasing data for further analysis easily.

It is, in fact, a much better experience if you can have a system that integrates with Staples using a punch-out process so each user gets the same experience. Any good purchasing system should be able to automate the transmission of the purchase order electronically to the vendors.

b) How are orders submitted

How you send purchase orders to vendors easily adds up to 15% of the total purchase order cost – on average, between $30 to $500 per purchase order.

So an important part of the purchase order process is understanding the areas where this additional cost can be reduced by automating the transmission of purchase orders to vendors.

Set Up Approval Limits

Approval limits are a part of your purchasing policy, helping you to configure accounting, but if you don’t have a purchasing policy, chances are you are probably doing one of the following

1. You don’t have any approval process, and the employees directly manage most purchases. The invoice shows up, and you send it for internal review before it is paid.

2. The other extreme is that the company owner reviews every purchase, drastically slowing down the process.

So what is the right answer for approval limits?

We recommend the following

1. Set up an 80-20 rule. 80% of the transactions should be reviewed by the department manager for which the purchase is made.

2. The number of transactions approved by senior management should not exceed 20%.

How did you decide on the approval limits, then?

If possible, review your purchase or invoice history to know the average amount for a single purchase. You can set up workflows to route requests to the appropriate person based on the average amount.

This is the most common scenario for most of our customers

1. For spend amount <= $5,000 , Immediate manager approval is required.

2. For amounts> $5000 and up to $25,000, immediate manager and department Director approval is required.

3. Any amount greater than $25,000 should be approved by a Vice president or a senior management team staff.

If you realize that most of your purchases are between $5,000 and $10,000, you can increase the limit for managers to $10,000.

When setting up workflows, there are two main areas to focus on

• What level of control and accountability do you want to give to middle management? I.e. managers, senior managers.
• How efficient do you want the process to be? For example, you want more control, so the owner of the company is reviewing every purchase. If that is the case, senior management is the bottleneck, and a purchasing tool will not help the purchasing process’s efficiency.

You have to find the right balance between efficient process and control.

Automate The Purchasing Process

Once the process is defined, it is time to automate it so that the basic purchasing steps can be automated.

Note: We encourage you to review online software that can help your business. Online software is often flexible with different industries (such as Manufacturing & Wholesale). Make sure to review their risk reviews, allowable limits for customization, annual commitment, monthly plans, network fees, ability to control users, file per subscription, what industry types they work best, messaging premium,  registered trademark, and if they offer a free trial for a limited time. Before making a final choice, make a detailed list of the pros and cons of your preferred software.

Here are things to focus on for purchasing process automation.

Ease Of Use

Ease of use is a factor of two things

Ease of use = Amount of information captured x ease of navigation and data entry

The amount of information is what the user has to provide to create a purchase request.

Procurement and finance always want more information captured upfront so it is easy to report and capture better data.

Users, on the other hand, want to enter the least amount of data.

How do you find the balance?

First, if the same information is entered repeatedly, set it as default based on user preferences.

Second, if a piece of information can be entered later in the review process, for example, a Chart of Accounts, then that step should be entered by finance in the review process.

Any good purchasing system should be able to handle both of these scenarios.

The ease of navigation is how easy it is for users to use the system that you should be able to judge during the selection of the purchasing system.

Set Up Flexible Workflows

The approval workflow should be automated so the user is not burdened with identifying the right approval levels based on the purchase amount.

Remember that even though the approvals are automated, they still need approval.

So there should be multiple approval mechanisms so that it is easy for the users to approve the purchase request.

For example

• Through a mobile app so that approvals can be done on the go.
• Other applications like Slack, if most of your users are already using such an application
• Through emails so that the users don’t need to log in to the system.

Automated Transmission Of The Purchase Order To suppliers

The second thing you should automate is transmitting the purchase orders to the suppliers.

Once the purchase order is approved, the system should be able to automatically send the order to the vendor without needing any manual intervention.

If the vendor supports Electronic Data Interchange (EDI), that is even better because that increases the accuracy of the data.

Catalogs For Better User Experience

Vendor catalogs play a critical part in improving the purchasing experience for your employees.

So rather than spending time typing in orders, you can quickly select what you are looking to purchase.

You can manage the catalogs or link to the external vendor catalogs, also called “Punch -outs.”

You can read more about setting up catalogs and how to manage the catalogs in the Vendor catalog guide.

It’s best to utilize a tool that offers a drop-down menu, such as a “Vendor” drop-down, to help you manage your suppliers better.

Implement An Invoice Matching Process

You get visibility into your purchasing spending by implementing a purchase order process.

It also helps with better cash flow planning because all purchases are in the system before the payment.

But what happens when the invoice shows up?

The finance/ Accounts Payable team is still figuring out whether they should pay the invoice.

If you don’t have an automated match process, you are probably doing this manually and chasing people over emails.

There is a better way!

Once you set up the system for purchase orders, select a system through which the suppliers can send the invoices to you. Ideally, this should be one system, so you don’t have to keep exchanging data between multiple systems.

Two important factors to consider

1. Your suppliers should always quote the purchase order they submit the invoice. This is required for your matching process, whether manual or fully automated.

2. Your suppliers should be able to submit invoices in different formats based on their automation level. For example

– Via good old email.

– They can enter the data and upload the invoice online.

– Through Electronic Data Interchange (EDI) or cXML standard.

– Through mail, though it is not preferred because you need to scan the invoice and manually key it in.

Once you have the invoice in the system, set up the matching process to match the invoice data against other documents.

For example, you can match the Purchase order and Invoice (also called a 2-way match) or the Purchase order, Invoice, and Receipt (also called a 3-way match).

The matching process should match the following across documents

1. Total quantity (Ordered -> Received -> Invoiced)
2. Agreed-Upon Price
3. Total amount

Any good purchase-to-pay system can easily automate the matching process and offer custom field key features to match your business needs.

Discover how you can utilize QuickBooks Products to automate important processes in your business:

Take note that QuickBooks Online’s special features help improve your business processes. It also allows you to choose a paid 1099 E-File Service

. Feel free to connect with their dedicated account team to learn more:

• Available Mobile Application
• Assistance in Initial Setup
• Active Custom Fields
• Authentication Procedures to ensure security
• Intuit Data Protect
• Standalone Intuit Data Backup
• Encryption Techniques
• Intuit Payments Inc.’s
• Intuit Field Service Management
• Multi-factor authentication
• Customizable lines for invoices
• Automatic data backup

For optimal experience, ensure you have an excellent internet provider network availability. Internet access is very important when using QuickBook’s online products. Feel free to source internet providers that can ensure a high-speed connection for your company.

3 Common Triggers For Purchasing Automation

Yes, procurement automation makes sense on paper, but you would be amazed to know that over 50% of QuickBooks customers still have a manual purchasing process.

By manual, we mean creating purchase orders in SpreadSheets or Word documents.

Suppose you are a very small company (up to 10 people). In that case, you probably are not creating a lot of purchase orders anyways, and even if you are, the native purchase order functionality in QuickBooks does the job well.

However, when it comes to companies with 10 + employees, you start seeing the need for a better purchasing process that can sit on top of the QuickBooks system.

The first attempt to develop a better process is always a form!

That could be in a Spreadsheet, paper, or any other format. Over time, companies keep using the same process even though the purchasing need of the organization has changed drastically.

So why are so many companies still struggling with a manual process?

If you are one of them, you probably lack a trigger to look for automation. A trigger is an event that kicks in this thought… “We will not use manual processes anymore!!”

Here are some of the common triggers

Growth

In our experience, we have seen companies looking for automation when they are continuously growing the business, and the growth is driving an increase in the number of transactions.

For example, a CPG company is seeing an uptick in product demand, driving up the demand for raw materials. The volume of purchase orders has gone up, and the manual process is not scaling up.

Change In The Purchasing Process

Sometimes a change in the process drives the need for better automation.

For example, A company realized they are spending $50,000 in office supplies annually. The purchase is happening from 3 different vendors, and the company can save up to 20% by consolidating the vendors down to one.

Easier said than done, so they need a process that will always drive the users to the right vendor and ensure they can save money due to reduced cost.

Better Way To Forecast Cash Flow

This is a common scenario, and the need is very evident with the finance teams.

A typical process for startups and small companies is that they generally don’t issue purchase orders.

Someone would call the vendor, and once the product or any additional service is delivered, the invoice is sent by the vendor to the finance team.

The finance team is then left with figuring out who this invoice is for, whose budget this will hit, and whether this was an approved purchase. Sounds familiar!

There are a couple of issues with this approach

a) The spend has already happened, so whether the spend was authorized or not, you are obligated to pay the vendor.

b) The second issue is with working capital. The finance team can’t accrue the expense receipts till the invoice shows up.

So if you are looking for predictable cash flow, it is hard to predict that in advance because you don’t know what is being purchased.

So the finance team is looking for a way to get better visibility into spend and preferably before the invoice shows up. That can be easily implemented with the help of a purchase order process.

So how do you solve the issues – the obvious answer is to automate the purchasing process.

We don’t disagree with that, you probably need a purchasing system to automate the process, but that is not the subject of this post. We want to cover the key set of processes you should have before you start thinking about automation.

Automation will only make the current process more efficient, so it might worsen if you have a bad process.

 

Setup Integration With QuickBooks Online

The last step is integration with QuickBook’s system so that the invoices are now available for payment.

With the help of integration, you can set up a fully automated purchasing process on top of QuickBooks Online without investing any additional amount in your current QuickBooks Investment.

Here are a few things to consider from an Integration perspective:

1. Decide what documents and other item masters you want to send to QuickBooks. Identify what timeline you would like to do this as well. Don’t forget to migrate important customer information such as full name, contact details, email address, billing address, etc.
2. If you are not maintaining any Inventory in QuickBooks, we recommend sending the final invoice/Bill for payment. In our experience, having a purchase order doesn’t add much value for our QuickBooks customers.
3. If you need to maintain inventory items, then, by all means, send the purchase order.
4. You should decide what master data needs to be synced between your purchasing system and QuickBooks—for example, Supplier Master, Customer Master, etc.

Once you have decided on the type of transactions, the next step is to decide the frequency.

We strongly recommend real-time integration for QuickBooks Online customers to ensure immediate synchronization. To ensure security, don’t forget to use multi-factor authentication to secure your information.

In contrast, QuickBooks Enterprise has a customer portal that allows them to opt for a frequency of every 30 minutes. It’s worth noting that QuickBooks provides various annual subscription options, each with subscription benefits to suit your specific requirements.

To further understand the payment terms for your chosen subscription, refer to the QuickBooks Payments’ Merchant Agreement. Ensure you have a connector subscription to manage your chosen package better. For more questions, you can reach out to QuickBook’s Customer Success Team.

As mentioned, it is important to consider a reliable internet connection to get an optimal experience when using QuickBooks online. Without a persistent internet connection, you might risk delayed work processes.

Why Is Purchasing Automation Important?

Purchasing automation is crucial for streamlining your company’s procurement processes and ensuring efficient purchasing management.

Automating the purchase order approval workflow can reduce manual errors, shorten approval times, and increase accuracy.

Here are some of the reasons why purchasing automation is important for your business:

1. Streamlined Deposit Times: Businesses can significantly reduce deposit times by automating purchasing, ensuring faster payment processing and improved cash flow.

2. Efficient Enterprise Subscription Management: Purchasing automation allows businesses to effectively manage enterprise subscriptions settling their monthly price amount, enabling centralized control, cost optimization, and streamlined access to essential services.

3. Seamless Integration of Connected Services: With purchasing automation, businesses can easily integrate various connected services, fostering better collaboration and communication across departments, leading to increased productivity and efficiency.

4. Price Accuracy and Compliance: Automated purchasing systems ensure that purchases are made at the agreed-upon prices, minimizing billing discrepancies and avoiding overpayment or price variations.

5. Simplified Online Procurement: Purchasing automation eliminates the need for manual procurement by providing employees with the convenience of making purchases online, through an internet browser, anytime, and from anywhere.

6. Optimized Batch Invoice Workflow: Automated purchasing streamlines the regular invoice workflow, from generation to approval and payment, reducing manual errors, improving accuracy, and saving time on administrative tasks.

7. Enhanced Reporting and Analysis: Purchasing automation systems often provide additional reports and analytics, offering valuable insights into spending patterns, vendor performance, and inventory management, empowering businesses to make data-driven decisions.

Here are some of the many things you can organize efficiently with purchasing automation:

• Mileage Tracking
• Location Tracking
• Creating a Cash Flow Planner
• Worrying about purchase confirmation, purchase approvals, and schedule payments.
• Tracking payment history
• The ability to share reports with stakeholders

QuickBooks offers automation functionality that helps to ensure that nothing is missed in the purchasing process. With automation, purchase order approval processes become less time-consuming, more accurate, and more reliable.

This allows your company to save time and money, reduce purchasing costs, and increase productivity. Aside from that, you gain sharable reports that you can show your team so they understand metrics and statistics within your company.

If you want to see the current list price and other package prices for QuickBooks, please check it here.

4 Procurement Processes Every Business Should Automate

Automating procurement processes can bring numerous benefits to businesses, including increased efficiency, accuracy, and cost savings. Let’s delve deeper into each of the four procurement processes that every business should consider automating:

Purchase Order Creation And Approval

Automating the creation and approval of orders, whether group or la carte purchases, streamlines the procurement workflow. With automation, businesses can generate purchase orders quickly and consistently, ensuring accuracy and adherence to predefined templates or guidelines.

Automated approval workflows can route purchase orders to the appropriate stakeholders for review and authorization, reducing manual intervention and minimizing delays. This process automation eliminates the need for manual paperwork, enhances visibility into the procurement cycle, and improves overall operational efficiency.

Vendor Management

Managing vendor information, contracts, and communication can be complex and time-consuming, particularly as businesses work with multiple vendors.

By automating vendor management processes, businesses can centralize and organize vendor data systematically. This includes storing vendor details, contract terms, pricing agreements, and performance metrics in a digital repository.

Automation can also facilitate communication with vendors, such as sending automated notifications for contract renewals or updating vendors on order statuses. By streamlining vendor management, businesses can reduce errors, enhance collaboration, and build stronger supplier relationships.

Invoicing And Payment

Automating invoicing and payment processes can significantly improve efficiency and accuracy while reducing the likelihood of errors and delays.

Automated systems can generate invoices based on predefined rules, pulling information from purchase orders and contracts. This eliminates the need for manual data entry, reducing the chances of mistakes. Automated payment processes can integrate with financial systems and enable electronic payments, such as electronic funds transfer (EFT) or online payment gateways.

By automating these processes, businesses can expedite payment cycles, enhance cash flow management, and provide transparency in financial transactions.

Inventory Management

Effective inventory management is crucial to ensure businesses have the right products available when needed without tying up excessive capital in stock.

Businesses can accurately track inventory levels, monitor consumption patterns, and forecast demand by automating inventory management processes.

Automation can integrate with point-of-sale systems, supply chain management software, and other data sources to provide real-time visibility into stock levels. This enables businesses to optimize inventory levels, automate replenishment orders, and minimize the risk of stockouts or overstocking. Automated inventory management also facilitates better inventory control, reduces carrying costs, and improves customer satisfaction by ensuring product availability.

Automating these key procurement processes empowers businesses to streamline operations, reduce manual errors, save time and resources, and drive cost savings. By leveraging technology to automate routine tasks and enhance process efficiency, businesses can focus on strategic activities, foster better supplier relationships, and achieve greater agility in their procurement operations.

Why Should You Use Procurement Automation?

Procurement automation can streamline the tedious and time-consuming aspects of the purchasing process, making it more efficient and cost-effective for businesses. By leveraging the power of automation software, companies can automate the creation of purchase orders, track purchase orders automatically, and contain purchase order information within their history, allowing for better cost control and minimizing errors.

One such automation tool for informational purposes is Acctivate, which is integrated with QuickBooks, allowing for seamless synchronization of transactions. Using Acctivate, business owners can easily create purchase orders based on pre-established policies, thereby reducing the risk of errors and minimizing the time required for order processing.

Procurement automation offers numerous benefits, making it a compelling choice for businesses looking to optimize their purchasing processes. By implementing procurement automation software, companies can streamline operations, improve efficiency, and achieve cost savings.

Let’s explore the advantages of using procurement automation:

1. Time and Cost Savings: Automation eliminates manual, time-consuming tasks, such as creating purchase orders, tracking orders, tracking inventory item receipts, and managing shipping address, mailing address and other vendor information. Aside from that, it also helps you skip the hassle of worrying about card transactions, bank transfers (to banks like Green Dot Bank, Bonneville Bank, Evolve Bank & Trust), bank verification, and other items related to manual payments. By automating these processes, businesses can save significant time and reduce actual costs in their administrative operations.

2. Enhanced Accuracy: Manual procurement processes are prone to errors, leading to costly mistakes. The last thing you would like your business experience is gain additional cost. Procurement automation minimizes human error by automating data entry and ensuring accuracy in purchase orders, invoices, and other critical documents.

3. Improved Visibility and Reporting: Automation provides real-time visibility into procurement data, allowing businesses to track spending, monitor inventory levels, and analyze supplier performance. Comprehensive reporting tools enable data-driven decision-making and facilitate better strategic planning.

4. Increased Efficiency: Automation streamlines the entire procurement workflow, from requisition to payment. This results in faster order processing, reduced cycle times, and improved collaboration among stakeholders, such as purchasing teams, vendors, and finance departments.

5. Compliance and Control: Procurement automation helps enforce compliance with purchasing policies and regulations, ensuring adherence to budgetary constraints and approval workflows. It gives businesses greater control over their procurement processes, reducing the risk of unauthorized purchases or maverick spending.

6. Supplier Relationship Management: Automation software provides tools for managing vendor relationships effectively, bringing your company advanced inventory. It enables businesses to track vendor performance, negotiate better terms, and maintain up-to-date supplier information, leading to stronger partnerships and improved supplier management.

7. Scalability and Adaptability: Procurement automation solutions can scale with the growth of your business. They offer flexibility to accommodate changing business needs, handle increasing procurement volumes, and integrate with other systems or platforms as required.

By leveraging procurement automation, businesses gain a competitive edge by streamlining operations, improving accuracy, reducing costs, and enabling better decision-making. Whether it’s optimizing workflows, enhancing reporting capabilities, or enforcing compliance, procurement automation is a valuable tool for driving efficiency and success.

The Bottomline

QuickBooks is a great product to help wide ranges of industry editions in managing books across your online sales channels. Still, it is difficult to scale it for creating purchase orders and invoices unless one person enters all the data in the system or everyone in the company can access it.

Both of these options are not viable.

By implementing a purchasing system throughout your business processes, your company can implement a robust purchasing process, have more effective expense management, and gain a purchasing system that integrates the Purchase orders and Invoices with the QuickBooks system.

You get an efficient process and efficiency gains without replacing your QuickBooks system with an expensive ERP system.

The steps mentioned above would help you improve the existing purchasing process, even if you don’t automate the purchasing process.

Suppose you’re looking for a system to assist you with time tracking, shareable reports, vendor payments, supplier invoices, sales forms, etc. In that case, we highly recommend contacting your preferred software’s customer support team. There are monthly payment plans across different software to suit your needs.

So get started today!