Control Spending with a No PO No Pay Policy

When we first started offering the free Purchase Order Software a couple months ago, I did a blog post on the use of Purchase Orders as Step #1 on the path to controlling your company’s pending.

I didn’t set out to outline a three-step process for spend control but good things do come in threes, so here’s Step #2…

Once you have a reliable and efficient system in place for staff to request items and get them approved in a timely manner and you’re using Purchase Orders to keep track of your spending, the next thing you’ll have to work on is a way to get people to use the system.  User adoption is critical to the success of an e-procurement initiative.

There are countless ways to encourage user adoption of your new Purchasing System but if I had to pick one, it would be the No-PO-No-Pay Policy.

Basically, you inform all the parties involved (end-user requisitioners, the folks in Accounts Payable and, most importantly, your suppliers) that you will not pay invoices unless there is an approved Purchase Order for the goods or services.

Harsh?  Perhaps.  Difficult to enforce?  Sometimes.  Bound to be exceptions?  Maybe.

My goal for this blog post was not to give you all the ins and outs of implementing a No-PO-No-Pay Policy, but rather just to make you aware of it as an option to help control your company’s spending.

As it turns out, a good many organizations use policies like this, so maybe it will work for you.

If you would like to learn more, just Google “no PO no pay” and you’ll see lots of information and blog posts on this topic, like this one.

Stay tuned for “Step #3” in an upcoming post…

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