5 Major Pitfalls in Purchase Orders and How to Avoid Them

Jan 22, 2022 | Basic 101: Introduction to procurement

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Jan 22, 20223 min read

Creating accurate purchase orders is critical for successful business transactions. Double-check for errors, verify vendor information, and seek professional help if needed. Avoid inaccuracies to prevent delays, additional costs, and potential legal issues.

In the business world, purchase orders are an important part of many transactions. Accurate, timely purchase orders help ensure that goods and services are delivered on time, and that the terms and conditions of the purchase are correctly recorded. It is important to be aware of common pitfalls when creating and processing purchase orders in order to ensure that they are accurate and complete. In this article, we will discuss some of the most common pitfalls to avoid when creating and processing purchase orders. 

Some common pitfalls to avoid in purchase order processes include: 

  • Lack of clear communication: Miscommunication between buyers and suppliers can result in incorrect orders, delayed deliveries and added costs.
  • Neglecting to check supplier references: Neglecting to check a supplier's references before placing an order can lead to issues with product quality, delivery times, and overall reliability. 
  • Neglecting to establish clear payment terms: Neglecting to establish clear payment terms with suppliers can lead to confusion and delayed payment, damaging supplier relationships. 
  • Neglecting to monitor delivery schedules: Neglecting to monitor delivery schedules can lead to unexpected stockouts and lost sales. 
  • Neglecting to consider total cost of ownership: Focusing solely on the purchase price without considering the total cost of ownership can lead to unexpected costs and reduced profits. 

Spotting and Avoiding Common Errors in Purchase Orders 

Another common mistake when creating purchase orders is failing to double-check for errors. Businesses should pay attention to every detail of the purchase order and check for mistakes in spelling, pricing, payment terms, and other important information. It is also important to be aware of common errors that can occur when entering data into a purchase order system, such as typos and incorrect codes. Taking the time to double-check the purchase order can help avoid costly mistakes. With FactWise Source-to-Pay, organizations can automate Purchase Order creation as per RfX terms and never need to worry about inaccuracies or errors.  

It is also important to ensure that the purchase order is accurate and up to date. This includes verifying that the vendor information is correct, that the items being ordered are in stock, and that the pricing is accurate. Additionally, businesses should ensure that the purchase order is signed and dated by the appropriate parties. By taking the time to review the purchase order, businesses can help ensure that the order is processed correctly and efficiently. 

Understanding the Consequences of Inaccurate Purchase Orders 

When creating or processing purchase orders, it is essential to understand the potential consequences of errors or inaccuracies. Even a small mistake can lead to delays, additional costs, and confusion. In some cases, inaccuracies on a purchase order can even lead to legal issues. It is important for businesses to understand the risks associated with inaccurate purchase orders and take steps to avoid them. 

One way to reduce the risk of inaccuracies is to double-check all information before submitting a purchase order. Another solution is to implement a procurement solution, such as FactWise, that can identify and highlight inaccuracies and even suggest recommendations to the procurement team on selecting and negotiating with the right vendors. This includes verifying the accuracy of the item description, quantity, price, and delivery date. Additionally, businesses should ensure that all parties involved in the purchase order process are aware of the terms and conditions. This can help to ensure that all parties are on the same page and that any potential issues are addressed quickly. 

Knowing When to Seek Professional Assistance for Purchase Orders 

Finally, it is important for businesses to recognize when they need professional assistance with purchase orders. If a business is experienced with purchase orders, they may be able to create and process them without issue. However, if a business is unfamiliar with purchase order processes, they may need to seek guidance from an experienced professional. Doing so can help ensure that purchase orders are created and processed accurately and in a timely manner. 

In conclusion, there are many potential pitfalls when creating and processing purchase orders. By understanding these issues and taking steps to avoid them, businesses can ensure that their purchase orders are accurate and complete. Taking the time to double-check information, verify vendor details, and seek professional assistance can help businesses create and process purchase orders without issue. 

Our singular focus at FactWise is to create truly distinctive procurement software solutions that delight users and provide sustainable positive impact to the organizations we serve.  

About the Author

Stawan is the founder and CEO of FactWise. Before founding FactWise, Stawan was the NA TMT-Procurement Leader at McKinsey. Passionate about procurement, Stawan has 15 years’ experience in enabling clients of all sizes to achieve business impact via procurement.


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