The Invoice Arrived. Who Approved the Purchase?

An invoice lands in the accounts inbox for equipment delivered three weeks ago. The supplier wants payment. The delivery address is correct. Someone recognises the order, but nobody can find the agreed price.

Photo by Kindel Media

A few emails later, the picture starts to form. A manager approved the purchase verbally. A colleague added extra items over the phone. The supplier charged for delivery, although the original quotation appeared to include it.

Accounts now have to reconstruct a decision made elsewhere in the business.

This is where purchase orders earn their place: before an ordinary purchase becomes an afternoon of detective work.

What a purchase order should settle

A purchase order records what a business intends to buy from a supplier. It should identify the goods or services, quantities, agreed prices, delivery requirements and relevant payment terms. Its reference number gives both parties a way to trace the transaction.

The useful detail depends on the purchase. “Maintenance work” tells an accounts team very little. A description that identifies the site, scope of work and quotation reference gives them something they can check.

The same applies to products. If a business orders replacement chairs, the model, quantity and unit price matter. If assembly costs extra, that belongs in the order too.

Precision at this stage saves the buyer and supplier from having to rely on different recollections later.

Approval needs to happen while there is still a choice

Some businesses raise purchase orders only after the supplier asks for a reference to put on the invoice.

By then, the goods may already be delivered and the money committed. The document helps with administration, but the opportunity to question the purchase has passed.

An effective process puts approval ahead of the commitment. Someone checks whether the purchase is necessary, whether the price is acceptable and which budget will cover it.

That does not mean every box of stationery needs a director’s attention. Approval limits should reflect the value and nature of the purchase. Routine supplies can follow a shorter route than specialist equipment or a substantial service agreement.

The people doing the buying should know the rules without having to ask accounts each time.

The budget can look healthier than it is

Consider a department with a £20,000 equipment budget. Its accounts show £12,000 spent, suggesting £8,000 remains.

However, the department has also placed two approved orders worth £6,000 in total. Neither supplier has submitted an invoice yet.

Only £2,000 remains available for further commitments, assuming the existing orders proceed at their agreed values.

A purchasing process should make those outstanding commitments visible. Otherwise, managers can approve new spending against a balance that already has several claims on it.

Open orders need attention too. Cancelled purchases, completed orders with unused balances and items that will never arrive can all distort the picture if their records remain untouched.

A delivery is not always a completed order

Suppose a supplier invoices for 30 monitors. The purchase order confirms that 30 were ordered, but the delivery record shows that only 24 arrived.

There is a difference to resolve before the invoice can be dealt with correctly.

Checking the order, receipt and invoice together helps establish what was authorised, what was supplied and what has been charged. For services, the equivalent check may involve confirmation that an agreed stage of work has been completed.

Someone must own that confirmation. Accounts cannot reliably judge whether a roof repair is finished or a consultant has delivered the agreed work simply because an invoice says so.

Make the process usable on a busy day

A purchasing procedure might look sensible on paper and still fail in practice. If approval depends on one person who is frequently unavailable, staff will find another way to get urgent supplies.

Businesses need a workable route for absences, urgent requests and changes to existing orders. An increased quantity or revised price should leave a clear record of what changed and who approved it.

When reviewing purchase order systems from Cloud B2B, these everyday situations are useful starting points for a demonstration. Ask how a request moves between departments, how an absent approver is handled and how users find the supporting documents.

Use a recent, awkward purchase as an example. It will tell you more than a perfectly straightforward order. The real test comes when the next invoice arrives. The person processing it should be able to establish who authorised the purchase, what was agreed and whether the supplier delivered it without sending an email to the entire department.