All about PO flip

The procurement process is typically lengthy, starting from purchase requisition until final payment to the vendor. If an error is made even in a single step, the payment to vendors gets delayed. This is when the purchase order flip comes into the picture.

Meaning of PO Flip & components

A PO flip is an automated process of transforming a purchase order into an invoice. The word flip indicates this conversion of PO into an invoice. 

Below are some of the key components of a PO flip:

• Buyer contract
• Vendor details
• Payment terms
• Shipping details
• Other basic details include product description, quantity, rate, tax, etc.

Uses and benefits of PO Flip for enterprises

A PO flip streamlines the entire procurement process by making the delivery of goods faster, automating the manual process of creating invoices, and increasing supplier satisfaction. The benefits of using a PO flip are:

• Avoids errors: With PO flip, the data from PO is automatically moved to the standard invoice format. This eliminates manual entry of data and thereby improves the efficiency of the entire procurement process.
• Timely payment to suppliers: A PO flip creates an invoice instantaneously. This assists the buyer to settle the invoice faster. The time spent collecting, filing, and manually verifying the invoice before releasing payment is reduced considerably.
• Avail early payment discounts: Most suppliers give incentives to encourage early payments. By using PO flip, the buyers can reduce the time to get the invoices ready for settlement. This can help the buyers to avail prompt payment discounts.
• Avoid duplicate invoicing and other such frauds: A PO flip eliminates the need for manual invoicing. If invoices cannot be created without a PO, it becomes difficult to create fraudulent invoices. Also, duplicate invoices can be easily traced.
• Simplifies the 2/3-way matching process: In 3-way matching, the invoice, PO, and the goods receipt note (GRN) are verified for data accuracy. This process requires a huge trail of documents. Now, instead of verifying the accuracy of the invoices, PO flip directly takes the PO and converts it into an invoice. The buyer just needs to confirm the quantity of goods received.

When should businesses use a PO flip?

A PO flip works well when a purchase order perfectly matches an invoice. There is an assumption that the vendor supplies the full quantity stated in the PO. This doesn’t work for every business model. Thus, it is essential to understand the procurement model before starting with a PO flip.

A PO flip assumes that everything in the PO is correct. Other aspects need to be considered, such as price or quantity change which can be edited/modified by the supplier.

What if the supplier sends only half the quantity? 

In this case, the invoice information will be incorrect, and this may cause serious accounting issues. 

Thus, a business should only go for a PO flip if they have a straightforward procurement structure. Also, the supplier price and product remain constant. In such circumstances, a PO flip can help streamline the procurement procedure of your business.

What happens in a purchase order flip?

A PO flip digitally converts the purchase order into an invoice. All the line items of the PO are transferred to the invoice electronically. This is done on a real-time basis. The process starts when the customer sends an online PO through the supplier’s portal. This allows the orders to be electronically submitted to the supplier’s system. The software will assign an invoice number, date, and PO details and return them to the buyer.

This work is done instantaneously, thereby improving the efficiency of invoicing process and eliminating the chances of errors.

Tools/Software used for a PO flip

Any P2P (Procure to Pay)/I2P (Invoice to Pay) automation product will help the buyers and sellers to interact with each other through the purchase process. These web portals convert the purchase order into an invoice in simple steps: 

Below are the steps for transforming a PO into an invoice using PO Flip on Clear platform:

• You will receive a notification when the anchor/buyer sends the PO via the Clear platform
• Login to the vendor portal to view the inbound PO
• Click on the relevant purchase order to open it
• Click “Flip PO to invoice” at the top bar
• ll relevant fields from the PO get pre-populated into a new invoice
• You can review and manually edit/modify fields (GSTIN, shipment address, invoice creation date, tax details, quantity etc.) as needed
• Click on “Preview” to go through the invoice summary before the final submission
• Once all the fields are thoroughly checked, click on “Save” 

These tools help you complete invoice creation and processing within minutes, which could have otherwise taken hours of data entry and proofreading.