The complete purchase order process: From requisition to receipt
At a glance
The purchase order (PO) process ensures spending control, accuracy, and transparency across procurement activities.
Each stage (from requisition to receipt) relies on clear approvals, thresholds, and vendor confirmations.
Structured workflows keep purchasing accountable and compliant while preventing costly errors.
Moxo streamlines PO processes with templates, multi-level approvals, and secure vendor collaboration.
Why your purchase order process matters
Every organization purchases goods or services. But without a structured process, small inefficiencies add up quickly. According to McKinsey, companies can lose up to 10% of their spend because of poor procurement practices.
The purchase order process ensures order requests are documented, budgets are checked, and vendors are aligned before payment is made. It goes beyond paperwork; it’s about protecting budgets, avoiding disputes, and building reliable supplier relationships.
Think of it as the financial equivalent of a relay race: each stage, from request and approval to order and receipt, needs to hand off smoothly to keep the race on track.
6 steps in the purchase order process
A purchase order (PO) lifecycle follows a standard sequence, though the details may vary by industry or company size.
Step 1: Requisition
It begins when a team identifies a need and creates a requisition. This internal request outlines what’s required, why it’s needed, and the estimated cost. Without this, finance has no visibility into planned spending.
Step 2: Approval
Once submitted, the requisition is checked against budget limits and organizational thresholds. Approvals ensure that only authorized purchases move forward. For example, a marketing manager might approve software up to $5,000, while anything higher requires CFO review.
Step 3: Purchase order creation
After approval, the requisition becomes an official purchase order. This document acts as a contract, spelling out quantities, pricing, and delivery timelines. Vendors use it as a binding agreement to fulfill the order.
Step 4: Vendor confirmation
The vendor confirms receipt of the PO and acknowledges the details. This step avoids disputes later by ensuring everyone agrees on the “what, when, and how much.”
Step 5: Delivery and receipt
The vendor delivers goods or services. The receiving department checks for accuracy, quality, and completeness. Any mismatches are flagged immediately.
Step 6: Three-way match and payment
Finally, finance reconciles the PO, the vendor invoice, and the receipt. Only when these three match does payment move forward, ensuring accuracy and compliance.
Controls and thresholds in the purchase order process
Strong controls make the difference between efficient procurement and uncontrolled spending. Controls define who can spend, how much, and in which categories.
Budget thresholds prevent overspending. For instance:
- Orders under $1,000 may only require a department head’s approval.
- Purchases above $25,000 may need finance and legal review.
- Certain categories, like IT software or consulting, may require additional compliance checks.
A Deloitte report found that companies with robust procurement controls save 5-20% on indirect spend. Beyond cost savings, thresholds also ensure accountability, ensuring no single person can approve high-value contracts unchecked.
A real-world example: A regional consulting firm prevented budget overruns by setting automated limits in its workflow. Managers could no longer greenlight unplanned tools, keeping annual software spend aligned with forecasts.
Multi-level approvals and routing
In many organizations, approvals don’t stop at one manager. They follow a chain based on spend thresholds and organizational policies.
Traditionally, this routing relied on email chains, leading to delays, confusion, and no clear audit trail. A requisition could sit in an inbox for days, stalling projects.
Modern digital workflows reduce that friction. Each requisition is automatically routed to the right stakeholder, with reminders ensuring accountability.
One Moxo user highlighted how automated approvals reduced cycle times: “Before, invoices sat in inboxes for a week. Now, multi-level approvals are handled in hours, not days.”
Vendor confirmations and changes
Even after a purchase order is sent, vendors sometimes propose changes – adjusted pricing, delivery schedules, or substitutions. Without proper confirmation, this creates downstream disputes.
Vendor confirmations act as a checkpoint. They document agreement before goods ship, protecting both sides. If changes arise, updated confirmations keep records clean.
Consider the case of an accounting firm working with multiple software vendors. By requiring written vendor confirmations, they avoided delays in onboarding and had a clear paper trail when auditors asked for supporting evidence.
How Moxo streamlines the purchase order process
Digitizing procurement brings transparency, speed, and security. A smooth PO process depends on structured approvals, real-time updates, and accurate document flow.
Platforms like Moxo embed the entire purchase order process in a single, secure system to create a streamlined workflow.
Configurable thresholds
Set budget limits and category-specific controls to ensure compliance.
Multi-level approvals
Automatically route requisitions through department heads, finance, and leadership.
Vendor confirmations via Magic Links
Suppliers confirm or adjust POs securely without needing accounts or portals.
Audit-ready records
Every approval, confirmation, and change is logged for compliance confidence.
Moxo’s approach transforms what was once a slow, error-prone process into a real-time collaboration between internal teams and external vendors.
Procurement teams can design end-to-end PO workflows with the no-code builder, from requisition intake to receipt confirmation. Workflow automation handles approvals, escalations, and notifications automatically, reducing delays.
Through vendor portals, suppliers can submit quotations, acknowledge POs, and upload delivery notes, keeping the process transparent for all stakeholders. Integrations ensure every status update syncs directly with ERP systems.
Real-time reporting dashboards provide visibility into order progress, exceptions, and cycle times, helping procurement leaders close loops faster and maintain governance at every stage.
Manual vs. digital purchase order process
Structured workflows keep purchasing accountable and compliant
The purchase order process may seem routine, but it’s critical to financial discipline and vendor trust. From requisition to receipt, each step builds transparency and accountability. Adding controls, approvals, and confirmations ensures money is spent wisely and projects move without delay.
Modern platforms now make it possible to digitize and simplify these steps. By embedding workflows, automating approvals, and engaging vendors seamlessly, businesses gain both speed and compliance.
If your procurement team still relies on spreadsheets and emails, now is the time to rethink your approach. Explore how a solution like Moxo can bring efficiency, control, and visibility into your purchase order process.
Book a demo to see it in action.
FAQs
What is a purchase order process?
It’s the structured workflow organizations use to request, approve, order, and pay for goods or services. It ensures spending is controlled, documented, and aligned with budgets.
Why are controls important in the purchase order process?
Controls prevent overspending and unauthorized purchases. They enforce budget discipline and provide a clear audit trail. Without them, companies face higher risks of errors and fraud.
How do vendor confirmations help?
Vendor confirmations verify that suppliers accept the terms of the order. They reduce disputes and protect both buyer and vendor from miscommunication.
Can small businesses benefit from a PO process?
Yes. Even smaller companies need visibility into spending. A lightweight purchase order process helps track expenses, manage vendor relationships, and avoid surprise costs.
How does Moxo support the purchase order process?
Moxo streamlines approvals, enforces thresholds, and enables secure vendor confirmations via Magic Links. This makes procurement faster, more transparent, and audit-ready.
