Most of the challenges in maintaining a well controlled purchasing process can be met by using an integrated purchase order system. There are several attributes to a good system that should be sought:
There should be a three point receipt process that matches a receipt to an approved purchase order, and matches the vendor’s invoice to the receipt. This helps a business maintain proper separation of duties over the purchasing process.
The entry and release of purchase orders should be well controlled. A purchase order is a legal document, committing the buyer to purchase the goods and services from the seller. A good system will restrict access to the PO entry system, and will allow for a management approval process before the purchase order is released. Additionally if your organization imposes strict budgetary control, you will want the purchasing system to evaluate budget variances to ensure that purchase orders don’t commit the organization to expenses beyond their approved budgets.
To help ensure accurate financial reporting, the purchasing system should automatically track un-invoiced receipts that arise when goods and services are received prior to the vendor’s invoice being entered to payables. This can be a problem for some systems, so make sure you check this out for any system you’re looking at.
In order to maintain an accurate record of your outstanding commitments to vendors, the purchasing system should keep good track of partially received and partially invoice purchase order lines, and provide for managing PO line statuses.