{"id":6089,"date":"2024-06-05T18:07:15","date_gmt":"2024-06-05T18:07:15","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=6089"},"modified":"2024-06-05T18:11:36","modified_gmt":"2024-06-05T18:11:36","slug":"indirect-spend-when-do-you-require-a-purchase-order","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2024\/06\/indirect-spend-when-do-you-require-a-purchase-order\/","title":{"rendered":"When Do You Require a Purchase Order for Indirect Spend?"},"content":{"rendered":"

Introduction<\/strong><\/p>\n

For Accounts Payable departments, transactions that are require little to no human intervention are the most efficient and require the least amount of resources.\u00a0 While processing invoices without an associated purchase order is also straight-forward, the reality is that by not having a purchase order there are many possible problems, including a greater risk of duplicate payments, purchases that are not pre-approved, purchases that don\u2019t take advantage of negotiated prices, purchases from new vendors requiring new set-up, and the possibility of difficulties with the purchased items or purchased services.<\/p>\n

While Accounts Payable is typically aligned with the Finance function, the reality is that AP is one of the final steps in the overall purchase to pay process, where \u201cpurchase\u201d is significantly more important than \u201cpay\u201d.\u00a0 When acquiring goods or services, having purchasing involved is usually the best alternative, and doing so typically means a purchase order is required.<\/p>\n

Polling Results Review<\/strong><\/p>\n

The results from a Peeriosity poll provides insight into the various approaches Peeriosity-100 members take regarding purchase order requirements for indirect spend.\u00a0 Only 12% of responding companies indicated that a purchase order was required for all indirect spend.\u00a0 The largest category, at 46%, indicted that the type of purchase determined if a purchase order is required, with 18% indicating dollar amount was the predominant factor.\u00a0 12% indicated a mix of dollar amount and purchase type, and 12% selected \u201cOther\u201d and commented that it was dependent of the payment mechanism (for example, purchasing card transactions do not require a purchase order).<\/p>\n

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The second polling question looked whether or not a purchase order was required for utility payments.\u00a0 The results indicate that only 18% require a purchase order for utility payments and 46% do not require a purchase order. For an additional 18% the requirement varies by company location or business unit, and for the balance of 18% they use a 3rd<\/sup> party provider to process utility invoices, so utility payments are not processes inhouse.<\/p>\n

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A few of the comments from members include:<\/p>\n