Page 26 - Millennium U4F Brochure 2021

Unit4 Purchase Order Processing and Purchase Invoice Matching (POP/PIM)
Unit4 Financials POP/PIM will enable you to understand, control and manage costs to provide improved invoice matching, budgetary control and cash flow forecasting.
Six benefits of using an effective Purchase Ordering system:
1.
Costs approved before being incurred:
The primary benefit of purchase ordering is expenses/purchases approval before they are incurred. The approval process takes place at the start of the purchasing process, so maverick spend is eliminated and budget accountability established. Then you can easily manage budgets, understand costs and proactively run projects.
If the approval occurs during receipt of the purchase invoice then rather than controlling spend, this process simply tries to account for what
has already taken place, when
the company is committed, and
the goods have been despatched. Furthermore, this process is
highly inefficient and creates bottlenecks in the Accounts Payable Department, who are forced to serve as corporate watchdogs.
2.
Internal control enhancement:
Two critical points of control:
• Receiving items or a service against what was ordered. For example, the originator of the PO will ‘receive’ acknowledgement
of completion of the service.
This simple process enables Unit4 Financials to automate cost accruals by identifying unmatched goods received notes (GRN) and posting the itemized accrual to the finance module.
• Pricing: Unit4 Financials can maintain historical item costs against individual suppliers so buyer can make an informed judgment. There is also a “Request for Quotation” module within the application. A unique PO number is the key reference number for the document. This becomes the ‘control’ number
that links supplier documents: PO, goods received note (GRN) and invoice. The numbers are sequential which adds a level of control to limit abuse.
3.
Management of committed costs:
When a purchase order is executed by the buyer and seller it commits both parties to the terms of the document. Committed project costs are those costs committed but not incurred – PO issued but goods not received. Within Unit4 Financials commitment accounting is possible and these costs can be controlled within a unique balance code.
4.
Improve project profitability:
A common mistake when managing project profitability is only considering incurred costs (actual invoices received) and this provides only a partial picture. To understand the true profit of a project, committed costs must be included. Expected revenue minus total costs (incurred cost plus committed costs) equals potential profit.