Purchase orders and procurement can be multifaceted and complex, but they can also be simplified. Unlike manual methods, NetSuite procurement and purchase order management are simple, direct, and accurate.
NetSuite is heavily relied upon by many local and global corporations to manage critical business processes. NetSuite automates many essential tasks as one of the leading options in business operational management software for companies across many different sectors. This is especially the case for managing the procurement and purchase order processes.
This article will cover the following topics:
- What is a NetSuite purchase order in NetSuite, and how is it closed & approved?
- Why Should You Open Purchase Orders in NetSuite?
- NetSuite’s Procure-to-Pay Process
- Managing Approvals in NetSuite PO
- Onboarding Vendors to NetSuite
- NetSuite Procurement & Purchase Management Benefits
What is a NetSuite purchase order, and how is it closed & approved?
In NetSuite, a purchase order is defined as an order placed for inventory or services from a vendor. In most businesses, before a purchase order is placed, it must go through the proper channels of approval. NetSuite maintains fidelity in aligning with these traditional business practices and provides the option to enable the approval request feature when submitting purchase orders.
- If the organization enables the Approval Routing feature, a purchase order request will need to be approved by the designated personnel before being submitted as a purchase order.
- In NetSuite, a purchase order request can only be placed through the employee center if the Approval Routing feature has been enabled.
Steps to submit a purchase order request in NetSuite:
Step 1. Log in to the Employee center and click on Enter Purchase Request button
Step 2. Fill out the purchase request form as follows:
- Choose the desired vendor that provides the services or products selected under the Items subtab
- Choose the date that the order will be received in the Receive by field.
- Select the class, department, and location for this purchase order request.
- The currency will be pre-populated. However, this setting can be changed if the company utilizes multiple currencies.
- To request items to be purchased, choose the Items subtab
- Choose the Item and input the quantity that will be purchased
- Select Save
Note that the data input should come directly from finance teams, rather than sales or other departments. If different terminology and processes are used on a department-level basis, discrepancies and headaches may arise. This is why external platforms, which are more intuitive and user friendly, possess such utility.
That said, once the purchase order request has been submitted, it must be approved if the Approval Routing feature has been selected.
Why Should You Open Purchase Orders in NetSuite?
Purchase orders are a standard part of business operations and undoubtedly can be completed without NetSuite, though placing the PO in NetSuite has several advantages. When taken as a whole, the NetSuite procure-to-pay process is entirely streamlined. Its advanced procurement features fully automate the entire process by submitting purchase orders, approving POs, logging items received, and onboarding new vendors. With a fully integrated Purchase to Pay (P2P) process, NetSuite provides any company with the ability to leverage unparalleled procurement management.
Step by step guide to setting up Procure to Pay in NetSuite
Procure-to-pay, also referred to as P2P, is an integral process in an organization that describes the request, receipt, and payment of goods and services. The P2P process is traditionally complex and hinges on several manually completed tasks. As manual tasks increase the risk for error, using P2P in NetSuite offers a drastically simplified process that is fully automated and streamlined. This provides optimal efficiency in the procure-to-pay process.
Set up of the NetSuite P2P process is as follows:
Step 1. Create a Vendor by going to Lists > Relationship > Vendor > New
Company Name is a mandatory field.
Step 2. Create an Item based on inventory and non-inventory by going to Lists > Accounting > Items > New > Non-Inventory > Purchase
( If vendor is selected in the item form, the vendor name will display automatically in the vendor field.)
Step 3. Create a Requisition with Vendor and Item
A requisition refers to a request for services or goods made by an employee to the approved personnel.
To create a requisition, click on: Transactions > Purchases > Enter Requisition > New
Next, create the order of requisition by filling out the appropriate fields. Once the requisition has been submitted, this will complete the purchase order. In practice, this enabled companies to engage in bill payment.
Step 4. Edit the Purchase Order and add the necessary details.
Go to Transactions > Purchase > Enter Purchase Order > List
Select Edit to populate the fields automatically
Step 5. Create a receipt for the purchase order.
Step 6. Create an invoice for a specific receipt.
Step 7. Make payment for a specific invoice.
Step 8. Access General Ledger by going to Bill Payment > Action > GL Impact.
Managing Approvals in NetSuite PO
Allowing employees to universally open purchase orders is prohibitive to cost control and increases the potential for errors. It is necessary to automate the management of approvals through robust ERP software such as NetSuite. Managing approvals in NetSuite is simplified once the Purchase Order Request option has been enabled. With this feature activated, supervisors assigned to manage approvals in NetSuite may request purchase orders.
NetSuite PO Approval Process:
The first step is to assign an Approver by going to Lists > Employees > List
The next step is to edit the requester employee record
- Choose the Supervisor in the supervisor field
- Select the Human Resources subtab
- Go to the Expense and Purchasing field group, choose the Purchase Approver, and select the approval limits.
- Write the approval workflow for purchase request approvals or Install the Purchase Request Approval Workflow bundle.
- In the Employee center dashboard, the approver will go through the list of "Purchase Requests to Approve."
- Click on Purchase Requests to Approve to display all pending purchase requests.
- Select Approve or Reject as needed.
- After approval is completed, the user can select the Convert to Order button.
- Select Convert to Order to convert the Purchase Request into a Purchase Order. The internal ID will remain the same.
With the Purchase Order approval process, employees can directly request approval from supervisors for goods and services that need to be purchased.
Eliminate the challenges of manual approvals
With approvals routed through Netsuite P2P, the need for manual entries is eliminated. No longer will employees need to traverse departments searching for the correct manager to sign off on various purchase orders. Instead, with the NetSuite purchase order approval workflow, the purchase order request is sent directly through NetSuite, and the correct manager can approve it within one singular system. Creating a PO approval workflow in NetSuite optimizes the PO approval process from start to finish.
Onboarding Vendors in NetSuite
A vital component of the procure-to-pay process is the onboarding of new vendors. As an organization expands and new vendors are acquired, it will need to establish a unified onboarding process. Onboarding vendors in NetSuite allows for a smoother PO process and eliminates the need to onboard vendors individually through a manual system. Using NetSuite, a company can ensure that each vendor is thoroughly checked and verified before being added to the NetSuite account system. This prevents duplicate vendor accounts and avoids the onboarding of unnecessary vendors.
NetSuite Procurement & Purchase Management Benefits
As an organization seeks to establish a secure and efficient procurement and purchase management system, it is helpful to explore the benefits of using NetSuite for this purpose.
The primary benefits of NetSuite procurement and purchase management include:
- Improved cost control
- Clear communication
- Automatic tracking
Improved Cost Control - Within a systemized procurement management workflow, companies have more direct control over spending and avoid unapproved purchases.
Clear Communication - An advanced procurement system creates the opportunity for clear and concise communication along with all approval, request, and payment channels. Information flows among the requester, approver, and supplier in one singular workstream.
Automatic Tracking - Automatic tracking features simplify the need to continually check the purchase order request status. Instead, purchase order requests are accompanied by automatic reminders and notifications. This helps users save time and focus their energies on more important endeavors, especially when using platforms like PayEm.
PayEm's P2P Solution
From the requesting stages to the payment and receipt of vendor goods and services, PayEm's NetSuite P2P solution offers 360-degree support. With PayEm's advanced procurement management system, organizations can take NetSuite further than they ever thought possible. With features such as multi-currency support and fully integrated NetSuite procurement management, the process of purchasing becomes an intrinsically holistic and simplified component of daily business operations. PayEm allows any business to make the purchasing process much faster, easier, and more simplified for those needing to buy while allowing for enhanced involvement at every stage for those needing to approve. Contact PayEm's experts for a commitment-free, no-cost demo of the platform.
For additional information regarding PayEm's NetSuite capabilities, be sure to check out our articles regarding transaction management and subsidiaries.
Jordan A. W. Steinberg