Purchase order processing: raise, match and close POs

Key takeaways

Purchase order processing is the routine of raising a purchase order (PO) from an approved request, sending it to the supplier, confirming price and date, matching the delivery and closing the PO when the invoice is matched. It is rule-based and frequent, so it suits a dedicated team. Keep supplier choice and spend approval in-house.

• 5 steps: raise, send, confirm, receive, close.
• Open POs older than 30 days usually signal a problem.
• A PO number on every invoice makes matching fast.
• Approval limits stay in-house; processing can move.

What does purchase order processing involve?

Purchase order processing turns an approved request into a commitment to a supplier and tracks it until it is paid. The routine steps are raising the PO with the right codes, sending it, logging the supplier's confirmation, recording goods received and closing the PO once the invoice matches. Each step is repetitive and checkable, which is why it suits a written method.

• How UK SMEs can use outsourcing to handle repetitive tasks
• Purchase-to-pay process: faster, cleaner supplier payments

Which steps can an outsourced team run?

An outsourced team can run every step except the spending decision. It can raise POs from approved requests, chase confirmations, update expected dates, log receipts from delivery notes, flag mismatches and close completed POs. The approver in your business keeps the authority to commit spend and choose suppliers.

• Raise POs from approved requests with the right codes.
• Chase supplier confirmations and log dates.
• Record goods received from delivery notes.
• Flag price or quantity mismatches.
• Close POs once invoices match.

• Three-way matching: stop paying invoices you should not
• Supplier chasing: expedite orders before they slip
• Work request intake: one form for every routine job

What does PO admin cost in time?

In an illustrative example, 250 POs a month at 8 minutes each for raising, chasing and closing is about 33 hours, plus time spent on the 10% with mismatches. These are example figures. At the indicative managed offshore rate of £9–£18 an hour, that work costs £300–£600 a month outsourced, against senior time in-house. These are not GBL prices.

• Work out your cost per task before you outsource
• In-house vs outsourced accounts payable

When should PO processing stay in-house?

Keep it in-house when most purchases are negotiated one by one, when buyers and processors are the same person by necessity, or when there are only a few POs a month. Also keep it while your coding and approval rules are still being agreed, and fix those first.

• Approval bottlenecks: when sign-off holds up the work
• Should you fix a process before you outsource it?

What does this look like in practice?

A pattern we see: dozens of POs stay open for months because nobody closes them, so the open commitment report is useless. A daily routine that closes matched POs turns it back into a number the owner can trust.

• See client work
• BPO Solutions for UK businesses

PO processing checklist

Set up the routine with these checks.

• Written approval limits by role.
• Required fields on every PO request.
• Supplier confirmation logged within two days.
• Goods received recorded on delivery.
• Open POs reviewed weekly by age.

• Supplier statement reconciliation: catch missing invoices

Next step

Send us how you raise and close purchase orders today. We will say plainly which steps a managed team could run and what stays with your approvers.