What Is Purchase Order Automation And How Does It Work?

Let’s start with the basics. A purchase order (PO) is just an official document sent from a buyer to a supplier to buy items in a specific quantity at a particular price. It’s like placing an official order with all the details locked in. Once accepted, it becomes a legal agreement. 

Now, sounds simple enough, right? But here’s the catch: managing POs manually is a total headache. 

If you’re using spreadsheets, emails, or printed forms to request, approve, and track POs, you know the struggle is endless email chains, approvals getting lost or delayed, budgets going out the window, and whatnot. 

What is purchase order automation? 

Purchase order automation is exactly what the words say: using software to automate the repetitive, chaotic, manual processes of your PO, like creating, approving, sending, and tracking purchase orders. 

Automation tools handle the laborious and error-prone tasks instead of working on hard-to-track Excel sheets, chasing signatures, or sorting through endless erroneous reads. In fact, about 90% of Excel sheets have errors. You click a few buttons, and boom, PO created, sent to the correct approvers, routed to the right vendor, and logged for audit… all without lifting more than a finger. 

Automating purchase orders can accelerate processing speeds by 65-80%, transforming slow, manual workflows into quick, streamlined actions. 

Here’s a quick side-by-side of manual vs automated PO processes: 

 

 

Let’s not forget about human error, typos, duplicate orders, or someone approving a PO outside budget limits. Automated systems add checks and balances to prevent these headaches before they happen. 

How does purchase order automation work? 

Here’s how it usually works, step by step, minus the chaos: 

• Request creation: When employees need to buy something, say, laptops or packaging supplies, they log into the PO system, select from a dropdown menu of approved vendors or catalog items, and submit a request. Creating a new PO from scratch and manually adding items and their values is unnecessary. 
• Automated approval routing: Once submitted, the system checks your pre-set rules, such as budget limits, department codes, or who needs to approve based on the spend amount.
  Do you need manager approval or finance sign-off? The platform automatically routes it to the right people. And yes, they get pinged until they respond. Hence, there is no more drama about “Hey, did you see that email I sent last week?” 
• PO generation and dispatch: Once approved, the system generates the PO using your branded template and sends it directly to the vendor. Some tools even support auto-emailing with a built-in PDF copy, and in B2B networks, it can sync straight into the vendor’s system. 
• Tracking and status updates: The requester can track the PO status in real-time: “Pending,” “Approved,” “Sent,” or “Delivered.” No more digging through inboxes or Slack messages. Everything’s centralized. 
• Receipt and reconciliation: The system can match the PO to the delivery receipt and invoice when goods or services are delivered. This makes invoice payment approvals faster and less error-prone because everything lines up automatically. 

And the best part? Audit-ready logs. The system records every action, who approved it, when, and what was ordered, which makes finance teams (and auditors) very happy. 

Think of PO automation like having a super-organized assistant who never forgets a task, doesn’t need coffee breaks, and doesn’t let anything slip through the cracks. 

Why should you automate purchase orders? 

If you’ve ever lost a PO in your inbox, sent the wrong order to a vendor, or discovered after the fact that someone blew through the budget, congratulations, you’ve met the dark side of manual purchasing. 

Automating your purchase order process isn’t just about saving time (though that’s a big perk). It’s about running a brighter, tighter, and more scalable operation. 

Here’s what you get when you go automated: 

• Speed that doesn’t stall projects: Manual approvals can turn into waiting games. If there is one bottleneck, your whole procurement timeline gets thrown off.
  With automation, purchase requests fly through the system in hours, not days. The system nudges approvers, auto-routes requests, and keeps things moving. No more “Hey, just circling back…” emails. 
• Accuracy without the double-checking: Manual POs are error magnets, duplicate orders, wrong vendors, and typos in pricing.
  Accounting automation tools come with built-in validations. They pull real-time pricing, vendor data, and budgets directly from your system, meaning fewer mistakes and less rework. 
• Compliance you can count on: Do you need a clean audit trail or want to ensure everyone adheres to approved vendors and budgets?
  Automated systems enforce your rules, no exceptions. Every action is logged, every approval is tracked. Come audit time, you’re already three steps ahead. 
• Visibility into every penny spent: Who’s buying what? From where? How often? With manual processes, you either guess or need to look for the PO in a pile of files. Automation lets you see everything by department, project, or vendor in real time.
  That visibility gives you leverage to negotiate better deals, cut waste, and stay on budget. 
• Scalability for when your business grows: Manual processes break down as your team expands. More locations, more vendors, more requests = chaos.
  Automation scales with you. The system can handle it without blinking, whether you’re processing 10 or 1,000 POs a month. 

TL;DR: Automating purchase orders helps you move faster, stay in control, and make smarter decisions, without drowning in admin work. 

Key features to look for in a PO automation tool 

Not all PO automation tools are created equal. Some digitize your old mess; the good ones fix the mess. So, before you get wowed by dashboards and drag-and-drop menus, focus on what makes life easier. 

Here’s your hit list of must-haves: 

• Custom approval workflows
  Your procurement process isn’t one-size-fits-all, so your tool shouldn’t be either. Look for software that lets you build approval flows based on:
  • Spend thresholds
  • Departments or cost centers
  • Project types
  • Urgency levels 

This way, marketing POs don’t get stuck in the finance queue, and high-value orders go straight to leadership. 

• Budget control and alerts
  Innovative tools show you the budget before you approve a PO, not after someone accidentally overspends.
  Real-time budget visibility, automated alerts, and pre-approval checks help prevent that dreaded “Wait, how much did we spend this month?” moment.
• Vendor database integration
  The best systems connect directly to your approved vendor list. You can then automatically pull in vendor details, pricing, and even terms.
  That means fewer errors, no double entries, and easier onboarding for new suppliers.
• Audit trails and compliance logs
  Every action, every approval, rejection, edit, or email should be tracked in a clean, searchable log.
  This isn’t just for compliance. It also saves you when something goes wrong and you need to know exactly what happened and when.
• Integration with ERP, accounting, and AP platforms
  Your PO tool shouldn’t live in a silo. Look for one that plugs into your ERP, accounting tools (like QuickBooks or Xero), and AP systems.
  The smoother the integration, the less duplicate work for your team, and the faster you can move from PO to payment.
• Mobile access and role-based permissions
  Approvals shouldn’t get stuck just because someone’s out of office or working remotely.
  A good tool should offer mobile-friendly access and allow role-based permissions, so the right people see the right things, and only those things. 

A strong PO automation system isn’t just software. It’s a smart teammate that helps you control spend, reduce errors, and move faster, without creating more admin headaches. 

Tired of waiting weeks to get paid after sending an invoice? 

While purchase order automation streamlines procurement, it’s only half the battle. If you’re still managing payables manually, it’s time to fix the other side of the process. 

Forwardly helps you automate accounts payable and get paid faster, without the headaches. 

Explore real-time payments, cash flow insights, and seamless vendor payments designed for modern finance teams.