# Choosing the Best PO Software for Small Businesses

[Tori Katz](/content/author/tori-katz/index.html)

March 23, 2022

## Table of Contents

- [Free Supplier Risk Scorecard Download](/content/blog/purchase-order-software-small-biz#free-supplier-risk-scorecard-download/index.html)
- [What’s a PO System?](/content/blog/purchase-order-software-small-biz#what%E2%80%99s-a-po-system?/index.html)
- [Key Components of Purchase Order](/content/blog/purchase-order-software-small-biz#key-components-of-purchase-order-/index.html)
- [How a Purchase Order System works](/content/blog/purchase-order-software-small-biz#how-a-purchase-order-system-works-/index.html)
- [Benefits of a PO System](/content/blog/purchase-order-software-small-biz#benefits-of-a-po-system-/index.html)
- [How to Choose the Right Purchase Order System](/content/blog/purchase-order-software-small-biz#how-to-choose-the-right-purchase-order-system/index.html)
- [Key Takeaways](/content/blog/purchase-order-software-small-biz#key-takeaways-/index.html)

## Free Supplier Risk Scorecard Download

Download our free supplier risk scorecard here!

[Download the free tool!](/content/blog/purchase-order-software-small-biz#/index.html)

## What’s a PO System?

A [purchase order](/content/blog/purchase-order/index.html) system is a program built specifically to manage and track the purchasing process. A purchase order is the document created when your business is ready to buy a product or hire a service. This document outlines what you’re buying, the quantity, the price, and other important details. Once the supplier accepts the PO, it becomes a contract.

## Key Components of Purchase Order

### Payment terms

Set the details of how and when you’ll make payments, specifying payment methods like credit card or bank transfer, due dates, and other important information.

### Delivery terms

Include shipping methods and be clear on your expected delivery dates to ensure you receive what you ordered when needed.

### Product specifications

Include product specifications like what you’re buying, numbers of items, quality standards, and any warranties.

### Pricing

List the agreed-upon prices for your products or services. Include any discounts, taxes, or additional fees.

### Cancellation and returns

Outline guidelines for canceling or returning orders, including any penalties or restocking fees.

## How a Purchase Order System works

### Purchase request

The person or department needing to buy the product must create a purchase request for internal approval.

### Purchase order

If the purchase request is approved, the creation of a purchase order follows.

### Sending purchase order

The system will send the PO to your supplier, notifying them of its arrival.

### Receive the goods

The buyer receives what was purchased.

### 3-way match

A purchase order system can help you match the invoice and the received order with the original PO.

### Payment

Payment is processed.

## Benefits of a PO System

### Spending control

Procurement departments can focus on understanding business expenses, making it easier to manage budgets effectively.

### Effective communication

Clear order details lead to transactions free of concerns, improving relationships and reducing misunderstandings.

### Accuracy

Reduces errors in purchasing processes, ensuring that the correct items are received.

### Data insights

PO systems allow analysis of spending patterns, supplier performance, and purchasing trends for informed decision-making.

### Scalability

A purchase order system can adapt to meet evolving business needs, whether increasing the number of suppliers or managing larger purchase volumes.

## How to Choose the Right Purchase Order System

### User Friendly

Look for a system with a user-friendly layout as a key determinant of effectiveness.

### Customization

Search for a system that allows customization of purchase order templates to fit your branding and specific needs.

### Approval workflows

A great purchase order program offers tools to create your own approval workflow.

### Integration

A PO system should integrate well with other systems in your procurement department if needed.

## Key Takeaways

- **Organized Purchasing**: A purchase order system helps keep purchasing information organized.
- **Error Reduction**: Clearly defining product specifications and quantities minimizes mistakes.
- **Enhanced Control**: Approval workflows improve control over spending and budgets.
- **Streamlined Communication**: A formal process fosters better supplier relationships.
- **Time Efficiency**: Automating the purchasing process saves time.
- **Valuable Insights**: Reporting features aid in analyzing spending patterns and supplier performance.