- 1. Because your company still uses paper-based systems.
- 2. Or, because your company uses a complex software that is too intimidating to your employees. And, who would blame them for being reluctant to use it?
Bottlenecks are a thorn in your side. Why do you think your purchasing processes aren’t effective? Making errors are part of the human learning process. It’s a natural process that makes a human being stronger over time. However, in business this is not such an effective quality to have. To bridge the gap between you, more efficient and effective processes, and natural human error, you need to create better working methods.
According to a study done in the 1980s and 1990s on human error in business, a lot more mistakes were made than the businesses that put working processes in place and enforced these working processes as a routine.
Procurement mistakes are part and parcel of growing a successful business. They serve as valuable lessons but they shouldn’t happen all the time. Failure to curb procurement mistakes early on can deplete your budget. Before you know it, you may find yourself out of business, and looking for a job.
Procurement mistakes are often hard to detect. Particularly when your company uses Excel spreadsheets and email to process purchase orders. You can simply avoid this drawback by using an efficient purchase order software.
Please keep reading only if:
- You had a great sales month but, to your dismay, have no money in the bank.
- Your business is growing fast but there is never enough left over to give yourself that raise you so richly deserve.
Or my favorite:
- Opening your management accounts feels like scratching off a scratch card – you never know what you are going to get.
Your business is your vision. Every day you work to overcome different challenges to get to your goals. Your cashflow is the substance that your business thrives on. Tracking expenses should be second nature to your everyday business function.
The simple fact is, you need cash in your hand to run your business. If you only care about more money coming into your business than going out, you will lose sight of the objectives that you set in the first place.
All aspects of your business should point to bringing in revenue in order to make your ship sail smoothly.
Your outdated system is stunting your growth. You might not realize it or might avoid the ugly truth, that your paper-based purchase order system is keeping your business back from a healthy bottom line!
Let’s look at the process of a paper-based system
- The buyer realizes the need for a product after checking or being notified by the inventory system or a specific department
- The purchase order is written out or printed and given to the approver to get the golden signature
- The purchase order is mailed to the supplier, after which the supplier manually enters it into their system
- The supplier prints out an invoice and sends it back to the buyer by e-mail
- The buyer pays the invoice and notifies the supplier by Proof Of Payment
- The buyer enters the invoice manually into their system
- The supplier finally sends the shipment to the buyer
Having no approval routings in your company increases opportunities for overspending. For instance, when your company uses only Excel spreadsheets, it’s hard to set up approval routings, which means you can’t spend within budget.
This is what may happen when your company doesn’t have any approval routings in place: