Control Spending

Buying services with your free Purchase Order Software

Joe works in the housing development industry in New Jersey and was wondering if he can use SpendMap to buy electrical services.

Sure thing Joe.  SpendMap can be used to manage Purchase Orders for all kinds of services, just as easily as physical products.  And there’s actually not much difference in the process.

So using your example of buying “one hour of installing electrical outlets”, you might want to set up a unit of measure as “HOUR” in the Units of Measure Master File, and then you can use that UoM on the PO. So just like you would buy 1 EACH of a physical product, you would buy 1 HOUR of the service.

Another Unit of Measure that I see people use commonly for services is “LOT”. That is, rather than specifying the number of hours as the quantity for the order, they would buy “1 LOT” of services (e.g. Quantity: 1, Unit: LOT, DESCRIPTION: Complete installation and configuration of PC). This obviously makes sense when the number of hours is unknown and/or if there is a fixed price for the complete service. You can actually see a sample of this in the Evaluation Copy of SpendMap…just log in as the user “FULL”, and check out PO #10026 in that user’s PO Work Area.

With respect to the Item Master File, you may or may not decide to use that for services like this. For example, if you want to keep track of the history of all the times you bought that “electrical service”, by all means add an item to the Item Master as “Misc. Electrical Services” or something like that, and then pick that item each time you order those services, after which you can see the history of that service using this…
– PURCHASING > Status & Inquiries > Item History

That said, it’s also quite common to not use the Item Master for services, and just do a “one-off” instead. You can learn about that in the subsection “Using One-Offs”, in this section of the Online Help…
– System-Wide Features and Information > Master Files > About Master Files

Finally, you may want to consider the receiving process when buying services.  Many SpendMap customers do use the Receiving Module to indicate that the services that they purchased were “delivered” (i.e. completed).  While there’s no physical product to receive, you are nevertheless receiving the service, so you might want the status of the Purchase Order to reflect that, and of course if you’re using the optional Invoice Approval Module, you’ll want to know that the service was in fact delivered before paying the invoice, just like a physical product.

That said, it not uncommon to skip the receiving process for services.  If that’s your preference, you can just wait for the invoice to show up and you can do a two-way match (PO > Invoice) instead of a three-way match (PO > Receipt > Invoice), or you might want to check out the Auto-Receiving feature in SpendMap, which can automatically receive Purchase Orders for services on their delivery dates, without having to enter receipt transactions manually.  You can learn more in this section of the Online Help…
– RECEIVING > Utility > Auto-receive POs

Success Story: MCS Wins with Free Purchase Order Software

Managed Care Systems (MCS) was struggling to control their Purchasing, inventory and budgets with a patchwork of outdated systems.  Having grown to over 300 employees, MCS was overdue for an upgrade.  Unfortunately, there was no budget for a new e-procurement system, but that didn’t stop Eric Jeffers, who is responsible for the Purchasing Department at MCS.

“Our old system was written in-house a bunch of years back and it was starting to fall apart,” says Eric.  “The IT Department didn’t want to invest resources to fix it, so we kept limping along.  Plus, as an add-on to the Help Desk system, it was really just an over glorified word processor to start with; it could print a PO and keep some history, but there was still a ton of manual effort and duplicate data entry for each order, and it didn’t track inventory or provide any budget controls, which were big problems.  We were constantly going over budget because the managers who were approving orders couldn’t see the status of budgets real-time.  And we were running out of stock all the time, which meant a big panic, rush orders and extra charges for expedited deliveries”.

So when Eric found SpendMap with its real-time budget and inventory controls fully integrated with its world-class Purchasing functionality, he was optimistic to say the least.  “I have been working in Purchasing departments for 15 years and this is by far the best purchasing software I have ever seen,” says Eric.  “You can’t imagine how disappointed I was when I was told that we had no budget left for a new system and I had to wait until the following year”…

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Approving suppliers in your free Purchase Order Software

Carl in the United Kingdom asked…

“Is it possible to give a supplier an approval? Ford example a new supplier would be categorised as ‘new’ then on return of a supplier questionnaire would moved to ‘approved’.  Perhaps this can be done in the category tab of the supplier (master file)?”

That is a great question, Carl.  It really depends on what you need to do with the suppliers that are pending approval.  For example, if you just need to identify who they are (e.g. print a list of suppliers in the approval process, or search for them while using the system), then using the Supplier Category feature would work well for that.

You can learn more about this feature in this section of the Online Help…
– PURCHASING > Master Files > Supplier Classifications

If, however, you need more functionality around the supplier approval process, then here are a couple other features to consider instead of (or in addition to) the Supplier Category…

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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…

We put our money where our mouth is with free Purchase Order Software

It’s fitting, don’t you think, that you pay no money at all for this software that’s used to save you money (i.e. control your spending).

Talk about putting your money where your mouth is.

How to get internal support for a full Purchasing Software System

We’re positioning the Free-Procurement Project as free “Purchase Order software” for a bunch of reasons that I won’t go into here but the free version of SpendMap actually includes all 12 modules, including requisitioning, receiving, supplier invoice approval, even inventory control and asset management.

If all you want to do is automate your Purchase Orders, that’s fine – just stick with the Purchasing Module.  The functionality is compartmentalized, so you don’t need to use all features/modules if you don’t want to.

But if you’re up for it, you can use SpendMap to automate everything from initial requisition all the way through to the approval of the supplier’s invoice and integration with your Accounts Payable system.  This is commonly referred to as “req-to-check” or “purchase-to-pay” (P2P for short).

If you intend to branch out into these other optional areas, however, you should be prepared to present a business case to decision makers and other departments that will be affected, such as the folks in Accounts Payable, department managers who will be approving orders online, perhaps even end-user staff members (requisitioners).

To help you get started building a business case, here’s a list of how e-procurement software can improve your business results at each step of the procurement process…

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Requisitions vs. Purchase Orders

Week #2.

We’ve had a few questions about how to route Purchase Orders for approval.  In SpendMap, you don’t route POs for approval, you route Requisitions for approval.

But requisitions can then be converted into Purchase Orders automatically once they’re approved, so for all intents and purposes it’s the same thing. We just use the term “Requisition” to refer to the internal transaction that’s circulated for approval, while “Purchase Order” refers to the official order that goes to the supplier.

Many of you are coming from manual, paper-based environments, so you might be using the same piece if paper for both the internal approval process as well as placing the order with the supplier.  (more…)

First Things First

Launching the world’s first free e-procurement system got me thinking about “firsts”. Where does it all go?

If you’re going to automate your company’s purchasing and control your spending, you need a place to start. So for my first “real” blog post (so far, they’ve mostly been about the status of the project), I thought I’d point you in the right direction with a little piece of Purchasing 101.

Managing your company’s spending is just like managing your personal finances.  If you want to cut the waste and spend less, the best place to start is by just keeping track of your expenditures.

Even before you set yourself a budget or try to change your spending habits (that comes later), if all you do is keep track of where the money is going, somehow magically you will spend less. (this is well documented – I didn’t make it up)

In the business world, that means using Purchase Orders.  If you don’t start recording it, if you don’t have one place that everyone has to go before pulling out the check book or that corporate P-Card, there’s no way you will ever get to Step 2.

So if you’re not using Purchase Orders to track your spending, forget everything else for now and do just that.

Even something as basic as a Purchase Order form or an Excel template is better than nothing.  Better yet, download a free copy of SpendMap.  It’s way easier and you’ll get much better reporting so you’ll have the information you need to get to Step 2, whatever that may be.

Do you have any other tips or tricks that you can share with our readers?  If so, please add a comment, below.