I recently answered a question on the CIMA web forum about reasons for using any kind of PO system, and thought it a good idea to
include them here:
1. Reduce costs: once a system is put in to control expenditure you will see a decrease in spending, when used across a large company this can have a very positive impact. This could be between 2/5% depending on the company and the industry. Any organisation with high staff turnover can save more in some cases.
2. Visibility and control: A significant amount of time wasted by the finance team can be put down to chasing “ghost” invoices that arrive when no one knows about the goods or services they relate to. PO systems stop this happening and can also speed up the process of sign off by keeping all the data in a single place.
3. Better auditing: As part of ISO9000 it’s usually recommended to have a PO system in place to aid compliance. It can also speed up an external financial audit which results in lower fee’s.
These would be very common reasons for implementation, although each company we’ve worked with has many smaller specific reasons as well.