Some smaller businesses consider the Purchase Order (PO) to be an unnecessary step in the purchasing process, complicating a simpler process, and something better left for larger organizations with more time and resources. After all, you can simply jump onto a supplier's portal and buy what you need with a few clicks of the button—no purchase order necessary. The supplier, of course, will ship, document, and invoice everything correctly, and you will simply pay the correct price upon receiving the invoice—no checks or balances required. However, what may seem like a shortcut, can end up costing you time and money. To help you improve efficiencies and safeguard your profits, this article will help you:
Now, how about we start at the beginning?
A purchase order is a contract issued by a buyer that documents their intent to purchase products and/or services. Upon receiving the purchase order, the seller can accept, reject or modify the order (usually through the issuance of an order acknowledgment.) The PO becomes a legally binding contract upon acceptance by the supplier or vendor. Purchase orders are at the core of a solid purchase-to-payment process, streamlining the process of procuring goods and services and ensuring accuracy and efficiency. Although they may take a little time to complete (much less if you're leveraging a digital spend management solution), they allow for clear and explicit communication of critical information, thereby minimizing opportunities for errors that can lead to stock-outs and overspending and put your practice and profits at risk. Among other benefits, this legally binding document can help you gain control of your spending and should be a necessary part of your purchasing process.
Although they may vary and are often customized to business requirements, generally speaking, here is what a purchase order may contain:
Depending on your procurement purchasing workflows and standard practices, these items can be optional or a strict requirement. Utilizing a spend management platform such as Method, you can add location and category codes that allow you to control and analyze spending habits and identify opportunities for improvement.
At first glance, a purchase order can look very similar to an invoice as it can contain many of the same details. However, purchase orders and invoices differ greatly in their purpose and hold one very critical difference. Buyers create POs to document their intent to buy. Vendors create invoices to charge clients for goods or services rendered. The major difference is that POs communicate intent and are meant to spur action, while invoices reflect what occurred and is being charged. As an invoice requests payment, it should include all relevant information as to what is being charged for, as well as information needed to ensure proper payment processing. This includes an itemized breakdown of all items or services, quantities, prices, and units of measure, and currency, as well as referencing corresponding documents such as POs and packing or delivery slips and, critically, payment due dates. Of course, like all standard business documents, invoices must contain their unique identifier, an invoice number. With all the necessary information present, the buyer can perform a 3-way match, cross-referencing the purchase order with the packing or delivery slip to validate all information prior to issuing payment.
A digital purchase request and subsequent order approval process allow you to stop purchases that throw you over budget or simply don't make sense for your business before they occur. A purchase request is the first step in the order approval process. A control mechanism that helps to reduce errors and gain better financial control, an order request and approval process prevents overbuying and ensures purchases remain in line with your budget. Although similar to a purchase order in the information that it contains, a purchase request is an internal document whose sole purpose is to obtain approval from finance (or other pre-chosen appropriate personnel) prior to placing orders with suppliers.
Creating purchase orders does add a step, but the benefits far outweigh this additional effort, even more so if you leverage technology to help ease the burden. POs are an important part of the procurement process, helping dental practices to:
Additionally, using electronic POs (and purchase requests) comes with its own set of benefits. Paper-based purchase orders are more time-consuming, create more work for your employees and open you up to a range of potential errors. Using digital POs through a spend management platform removes these barriers and streamlines your purchasing, providing greater transparency through every stage of the dental procurement lifecycle as well as delivering a host of other benefits, which we've listed below.
Centralizing your purchase orders - Whether you manage a single location practice or a DSO, a cloud-based procurement environment can help you manage and organize POs in a centralized. This allows finance and front office staff full visibility on the status of orders, showing what has been requested to be ordered, what's approved, on order, and delivered. And because procurement platforms live on the cloud, you can rest assured that your POs are securely stored and easily accessible at any time, anywhere.
Avoid overspending and fraud - With full transparency, your entire team stays in the loop and ensures no requests are lost or forgotten. By simplifying collaboration across your team, the process also reduces unnecessary, incorrect, or duplicate orders, saving you money. Furthermore, implementing a proper receiving process and three-way match process makes it easier for accounts payable to spot fraudulent or inaccurate invoices before they are paid.
Lessen errors and maintain accurate procurement records (pssst… you can then use this data to leverage your volumes for cost savings) - We've already shown you the long list of information required for a purchase order. Now consider the very long list of dental supplies required for running your practice and the frequency in which they are purchased. That's a lot of information to maintain and enter accurately onto manual purchase orders. Procurement platforms are designed to reduce human error and streamline workflows. They also bring the added benefit of aggregating your procurement data into usable, digestible formats that allow for more strategic procurement and identification of potential areas of improvement. Once you know what you buy, how often, from who, and what price, you can use that information to negotiate better pricing with the supplier of your choice, and tighter control on your spending ensures you take advantage of that price and realize cost savings for improved profits.
Sustainability - Of course, let's not forget that a paperless purchase order system is better for the planet, lessening the carbon footprint of your dental organization.
A dental office is a busy place. However, staff purchasing your supplies are often the same employees responsible for taking care of patients and managing other administrative tasks. By leveraging the right technology, such as Method's spend management platform, you can simplify your purchase order process and safeguard your dollars and profits while making life easier for your employees. See who your preferred suppliers are, who has the lowest price on the market, and who has stock so you can make a sound purchasing decision. And that's just the beginning. Keep reading to find out more about how Method can enable accurate, efficient order placement.
The prices of supplies can vary greatly between suppliers. Without platforms like Method's, your staff is left to hunt for pricing and availability on their own, jumping from supplier portal to portal and relying on emails and phone calls to gather all the information they need. The process is extremely time-consuming, which is why many simply buy from the quickest and easiest source. But this leaves a lot of money on the table, money that should be going straight to your bottom line. Instead, Method allows you to quickly and easily see real-time pricing and availability across our detailed industry catalog of over 700,000 dental supplies and 2,000+ dental-specific suppliers. By bringing the market to their fingertips, employees can do their due diligence and comparative shop, ensuring they make the best purchasing decision for your practice.
If you're purchasing processes are further along, and you've implemented some buying rules you expect employees to adhere to, we can help you there, too. Method's Buying Profiles help you control rogue spend (spending outside of company policy) and ensure even new trainees can buy what they need within company policy. You can choose to give employees a choice and simply highlight preferred suppliers (identified by a star) or enter an "allow list" of preferred suppliers and limit your employee's view to preferred suppliers only. Have more than one practice? That's ok—we're built to handle that. Rules can be created either by location or for all locations.
Order the right item, in the right quantity, from the right supplier at the right price. The dental supply industry has a very long list of supplies that are often hard to distinguish from one another. By relying on technology to input text fields, you eliminate the chance of human error. For example, SKUs are long, hard to read, and often only differ by a character or two. By scanning a barcode rather than relying on manual entry and selection, you eliminate the chance for error, ensuring you buy the exact right item. As another example, the order quantity field ensures orders are placed in round order quantities. Say there are 6 of an item per box, you don't want to be ordering 9. Ordering the right quantity in the first place saves you from having to correct and resend orders to suppliers. To ensures the purchase order contains the best price that is available to you, Method also pulls and displays private pricing from API logins, contracts, and RFQs.Lack of visibility on open orders can lead to redundant orders, tying up cash flow and putting you at risk of expired or damaged stock. Luckily, to help you avoid duplicating orders, Method displays pending order requests and open, unreceived purchase orders.
To save time, you can enter an order request for multiple suppliers. Once approved, Method will automatically create and send individual purchase orders according to your supplier selection. When an order request is entered into Method, team members responsible for approvals are immediately notified through in-app notifications and email. Insights into purchase details and where you stand against budget help guide financial decision-making. A fully flexible approval process allows you to approve some items on a request while declining others. You can also provide reason codes upon declining to allow for future analysis. Soon you'll even be able to review and take action on purchase requests via email from any mobile device! Method empowers your office to make purchases with speed, control, and accuracy. For many dental offices, the buying process continues to be managed manually, reliant on emails, phone calls, supplier portals, and, yes, even fax machines. However, when leveraging technology, the process is streamlined, efficient, and effective, empowering your employees to make the most advantageous buying decisions for your practice. Buying smart and implementing best practices throughout the procurement lifecycle allows you to:
Want to learn more about Method's capabilities and our simple, flexible pricing plans? Click here. Ready to improve your spend management for improved profits? Request or demo or contact us for more information.
Method Procurement Technologies gives independent dental practices and DSOs the inventory management and procurement capabilities they need to succeed. With our full, end-to-end solution, ordering dental supplies is straightforward and hassle-free.
Learn how Method Procurement's spend management solutions can improve your bottom line. Get in touch with our team today or request a demo to see it for yourself.
