Procurement Software – What is it?
Procurement software, is a type of application software that records and processes purchase orders that commits a buyer committing to pay the seller for the sale of specific products or services to be delivered in the future. Procurement software simplifies the purchasing process and easily manages the complete PO life-cycle, from creation through approval and delivery to suppliers. Depending on the type of procurement system various stakeholders such as the procurement team, vendors, finance teams & employees can collaborate & communicate.
Accounting Software – What is it?
Accounting software is a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, journal, general ledger, payroll, and trial balance. It is a system of record wherein only the finance management team, CFOs, and internal auditors use the accounting software.
The main purpose of accounting software
- Record the process of sending and receiving payment transactions. They’re designed to record the flow of cash from the organization bank account and to perform automated calculations.
- Accounting software is predominantly used for payroll and account payables. They comply with the regular taxation policies automatically. These systems will be the main info provider on tax and audit information and can store historical data very important.
The main purpose of a procurement software
- The main characteristics of a procurement software are to create a purchase order document. Procurement software should be able to create documentation that will enable seamless communication with your vendors and track procurements inside your company
- Managing a huge vendor or supplier database and allowing you to track order history, payment methods, service terms and purchase order status tracking. This will be a huge benefit for internal finance teams to track as to when the payments are being made, service delivery etc.,
- Procurement software helps you to control your budget especially when a proper approval process is set up. To have more control over the spends, a more refined approval workflow is required. Most of the procurement software is designed in such a way that it keeps a track on when the order was received and through this data you’ll be able to identify the average vendor or supplier time management.
- Manage workflows to streamline the process of collaboration & communication among various stakeholders.
- Spend systems like a procurement software accurately forecasts the budget spends by analyzing the historical data. They understand the spend patterns and trends of your financial performance and helps you to understand where all to cut expenses, or to invest more. With this data, you can make data-driven decisions accordingly.
Why Accounting Systems are not designed to manage Purchase Orders?
- Accounting software has numerous limitations. Since the main purpose of accounting software is to keep a track on receiving and sending money, they’re not designed to withhold the information as held by a purchasing order software. Similarly, procurement software cannot be used for billing and invoicing purposes. Each of them has its own characteristics and functions.
- Another issue is that the purchasing teams will not be having access to the accounting software. Only the finance management team will be using it to the full extent. As a result, it will be very hard for the finance management team to keep a track on who created the purchase order, when was it created, when was that delivered, who’s the vendor, what are the payment terms etc., It becomes increasingly difficult for them to maintain such a record as their main priority would of settling vendor accounts.
FinlyFinance is a Finance Management & Governance Suite for businesses to automate, gain visibility & control business spend. The tax compliant platform comprises of a scalable & intelligent technology that automates the manual process involved in finance management. The powerful policy engine governs all business transactions & an integrated payment technology system allowing automated reconciliations.
Finly helps you gain insightful reports in real-time on your account payables & removes all spend management hurdles while your business scales. Finly suite has inbuilt purchase order templates and also allows you to customize your own templates. This can significantly reduce the documentation and forms and other paperwork saving a huge amount of your productive time.