“No PO/No Pay” was all the rage in the past decades… It was not a fad, it was a policy.
This, allowed companies to enforce compliance both internally and vis a vis its suppliers and thus to increase spend under management. It was a policy which also meant that a lot of the purchase orders were created after the fact. So “after-the-fact” POs became a thing too, which allowed many companies to have a 100% PO/invoice coverage ratio.
However, this also meant that many POs were actually invoice flips (unfortunate ancestors to today’s PO flips), offering little insights to the “purporsefulness” of the purchase, the righteousness of the pricing and the legitimacy of the purchase and the suppliers. Hence, limited compliance.
While a No PO/No Pay policy remains a good tool to send powerful P2P signals and to launch a P2P transformation, it is not the holy grail it once seemed. Today, there is a way to provide for a series of compliant avenues, alleviating the “PO pressure”, by providing the staff with a framework to express their creativity and empowerment compliantly. Furthermore, these tools also provide for ensuring the financial and accounting accuracy at the time of ordering as opposed to invoice processing is ensured.
These tools are:
- internal or external marketplaces embedded in your P2O ordering interface, and,
- modalities whereby users can perform limited but interactive tactical/collaborative sourcing with preferred suppliers within the same or,
- again are dispensed all together with creating a PO, by allowing suppliers to invoice against contract directly, and/or raise service-entry-sheet (SES) against these.
All of these tools can be configured to be limited in terms of category of spend, value, geography, marketplace, authorised users and validity period.
The concepts behind these tools are twofold:
- users solicit or review supplier offers, accept these and convert them into POs automatically sent out to suppliers, which in return convert these into compliant invoices: The user has choices, there is price competitiveness, the suppliers are preselected and the PO issues and sends itself.
- users order by any way (phone, email, sms etc) they choose, from suppliers under contract with the company and the supplier invoices against the relevant contract for this supplier/category: The user is free to order all services, works and items which are contracted specifically or non specifically by the company and confirms that the s/he has received, enjoyed and accepted their delivery.
So in 2020, the “No PO/No Pay” policy has become the “No contract/No Pay” policy.