Purchase orders (PO) are a fundamental part of the end-to-end accounts payable process within a company and help businesses provide transparency when managing their resources and relationships with suppliers.
Purchase orders are commercial documents issued by your company (as a buyer) of goods or services to a supplier (as a seller). Generally, purchase orders indicate the type, quantity, and agreed price for products or services that the supplier will provide to your company. Additionally, a purchase order will have a unique PO number which the supplier is expected to add to the eventual invoice that you receive.
Before creating a purchase order at Payhawk, employees submit a purchase request which will then be approved according to the pre-defined approval workflows at the company. Upon approving the purchase request, the purchase order is automatically created and can be sent to the supplier, requesting the delivery of goods or services.
Matching purchase orders with receipts and invoices before payment
Purchase orders for goods require a testimonial of delivery in the form of a Goods Received Note (GRN) - or receipt note. The supplier then sends an invoice to the buyer requesting payment for the delivered goods or services. The invoice is automatically linked to the purchase order by extracting its number from the invoice through the Payhawk optical character recognition (OCR) feature.
As a result, a three-way matching accounting process is automatically performed by Payhawk, meaning that the system checks the quantity between the purchase order and the receipt note, and then the net amount on the purchase order and the supplier's invoice before the payment is executed.
Purchase orders that do not require a GRN (receipt note) trigger a two-way matching accounting process. The Payhawk system automatically checks the net amount on the purchase order and the supplier's invoice.
Depending on the internal policy of your company, the organization may require receipt notes for purchase orders for both goods and services.
Permissions
In the Payhawk system, employees who can create purchase requests are called requesters. Requesters can also delete purchase requests before sending them for approval, submit them for approval, and upload receipt notes to purchase orders.
All employees can upload and link invoices to purchase orders and submit the expense for approval.
The setting of the numbering convention, discrepancy rules, purchase request approvals, payment approval workflows, and expense categories that require receipt notes, is done by Payhawk administrators.
Creating purchase requests
To create purchase requests in Payhawk, you need to provide the following details:
Description of the requested goods or services.
Number of units you request to purchase.
Currency and net amount per unit for the requested goods or total net price for the requested services.
You can create a purchase request without a supplier but you need to provide it before the approval of the document - the name of the supplier will be used as the name of the purchase order itself after it's created.
Deleting purchase requests
In Payhawk, you can delete your purchase request before submitting it for approval.
Submitting purchase requests for approval
After created, you can submit your purchase request for approval. The approvers are pre-defined by your Payhawk administrators and will receive the request in their Inbox.
Approvers can approve the purchase request, return it to you for additional details, or reject and delete it altogether.
Uploading receipt notes
If your purchase order is set to require a receipt note for the items you requested, you can upload the receipt note for their partial or full delivery.
Uploading invoices
When the supplier issues an invoice for the corresponding items or services, you can upload it for the Finance team to settle and reconcile the payment later on.
If the purchase order number is included in the invoice, Payhawk will automatically extract it and link it to the invoice.
Next steps