--- title: End Purchase Order Chaos with a Structured Approval Process description: A structured purchase order approval process can streamline procurement, prevent unauthorized spending, and reduce costly errors. Here's how to build one. image: https://www.brinkersimpson.com/hubfs/7-Aug-19-2024-09-00-53-5019-PM.png --- [610-544-5900](tel:+16105445900) • [contact@brinkersimpson.com](mailto:contact@brinkersimpson.com) [Client Portal ](https://www.securefirmportal.com/Account/Login/4874) [Pay Now ](https://www.brinkersimpson.com/pay-online) [Brinker Simpson ](https://www.brinkersimpson.com/) - [ Services ](https://www.brinkersimpson.com/services) - [ Strategic Advisory ](https://www.brinkersimpson.com/services/strategic-advisory) - [ Accounting Support ](https://www.brinkersimpson.com/services/accounting-support) - [ Tax Services ](https://www.brinkersimpson.com/services/tax) - [ Audit and Assurance ](https://www.brinkersimpson.com/services/audit-assurance) - [ Transaction Advisory ](https://www.brinkersimpson.com/services/transaction-advisory) - [ Valuation Services ](https://www.brinkersimpson.com/services/valuation) - [ Risk Advisory ](https://www.brinkersimpson.com/services/risk-advisory) - [ Peer Review Services ](https://www.brinkersimpson.com/services/peer-review) - [ About ](https://www.brinkersimpson.com/about) - [ People ](https://www.brinkersimpson.com/about/team) - [ Community ](https://www.brinkersimpson.com/about/community) - [ Industries ](https://www.brinkersimpson.com/industries) - Resources - [ Articles ](https://www.brinkersimpson.com/resources/articles) - [ Newsletter ](https://www.brinkersimpson.com/resources/newsletter) - [ Careers ](https://www.brinkersimpson.com/careers) [ Let's Connect ](https://www.brinkersimpson.com/contact) - [ Services ](https://www.brinkersimpson.com/services) - [ Strategic Advisory ](https://www.brinkersimpson.com/services/strategic-advisory) - [ Accounting Support ](https://www.brinkersimpson.com/services/accounting-support) - [ Tax Services ](https://www.brinkersimpson.com/services/tax) - [ Audit and Assurance ](https://www.brinkersimpson.com/services/audit-assurance) - [ Transaction Advisory ](https://www.brinkersimpson.com/services/transaction-advisory) - [ Valuation Services ](https://www.brinkersimpson.com/services/valuation) - [ Risk Advisory ](https://www.brinkersimpson.com/services/risk-advisory) - [ Peer Review Services ](https://www.brinkersimpson.com/services/peer-review) - [ About ](https://www.brinkersimpson.com/about) - [ People ](https://www.brinkersimpson.com/about/team) - [ Community ](https://www.brinkersimpson.com/about/community) - [ Industries ](https://www.brinkersimpson.com/industries) - Resources - [ Articles ](https://www.brinkersimpson.com/resources/articles) - [ Newsletter ](https://www.brinkersimpson.com/resources/newsletter) - [ Careers ](https://www.brinkersimpson.com/careers) [ Let's Connect ](https://www.brinkersimpson.com/contact) [ 610-544-5900 ](tel:+16105445900) [ contact@brinkersimpson.com ](mailto:contact@brinkersimpson.com) [Client Portal ](https://www.securefirmportal.com/Account/Login/4874) [Pay Now ](https://www.brinkersimpson.com/pay-online) August 26, 2024 # End Purchase Order Chaos with a Structured Approval Process by: [Brinker Simpson & Company](https://www.brinkersimpson.com/blog/author/brinker-simpson-company) 3 Minute Read Many businesses struggle with procurement, whether hiring contractors, buying equipment, or paying vendors. Here are some tips for streamlining your company's purchase order (PO) approval process. Benefits of a formal workflow POs create legally binding agreements between buyers and vendors. For example, your business might outsource a function, such as payroll or marketing, to a third party. A systematic approval process helps your business track and control its spending. ## PO approvals may involve PO approvals may involve users, purchasing managers, and executives. Some companies allow low-level employees to approve orders, but most have controls in place that require managers or executives to approve orders over a predetermined dollar amount. It's important to use a formal order approval process. Approving orders upfront helps prevent contract disputes and terminations. For instance, the procurement team may discover early on that a potential vendor lacks critical security or industry compliance to fulfill a contract. It also helps decision-makers and auditors understand how business units are spending money. If your business has a standardized, automated approval process, it can eliminate missing information and minimize delays. Steps in the approval process ## The approval process should The approval process should start with a PO request from a business unit for specific goods or services. The procurement department often lists approved vendors who have already been vetted and agreed to favorable pricing. The approval process is generally expedited if the employee selects a pre-approved vendor. After the PO request form has been completed, it goes to the procurement department. The team reviews the request to ensure it has all the required information. Approved vendors submit a price based on the requirements. The procurement team will vet new vendors. Additional information—such as proof of insurance or tax identification numbers—may be required for orders from new vendors. In some cases, a request for proposal (RFP) that specifies the requirements of the service or project may be sent to the vendor. Once all the necessary information has been gathered, the procurement team will approve or deny the request. Denied requests must explain what further steps are required for approval and provide a deadline for resubmission. Approved requests are forwarded to the final decision-makers for their approval. After, a purchase order is generated with a designated number. ## Once all the necessary When goods are delivered and inspected, the receiving department matches the PO number to the bill of lading. The payables department matches the PO number to the vendor's invoice and voucher to record the order correctly in the accounting system. This workflow helps ensure spending complies with the PO approval process, invoices aren't paid twice or overlooked, and costs are allocated to the correct business unit. Vetting your process Has your business outgrown its existing PO approval process? Some startups can get by with manual spreadsheet approvals. However, as your business grows, you may automate the process using a software-as-a-service (SaaS) program. Contact us for help streamlining your PO approval process. We can help evaluate your current procedures and set up performance metrics, such as average approval time and the percentage of denied requests, to determine areas for improvement. 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