Efficiency at its finest: Streamline your purchasing process with automation tools

What is the Purchasing Process?

The purchasing process includes creating purchase requisitions and purchase orders, receiving items and services, and recording invoices for vendors. Both procurement and purchasing are used synonymously, but purchasing is a transactional process while procurement is the umbrella term where purchasing is a part of it.

There are 6Rs in the purchasing process –

a) Right quality

b) Right materials

c) Right quantity

d) Right time

e) Right source

f) Right price

h) Right place.

Purchasing encompasses the strategic and operational processes that businesses use to fulfil customer needs.

Having a solid purchasing process is of utmost importance as it gives businesses a standard way of addressing their needs. It enables efficient financial planning, and it not only regulates compliance but also prevents procurement bypass and avoids unregulated spending.

Steps in the Purchasing Process

The ideal concept for the purchasing process is exchanging information and approval stages to complete the purchase. Though each business has its own set of purchasing procedures, all businesses, small or big, have the following steps, which are tried, tested, and well-seasoned.

1. Intensive assessment

This is the first step in the purchasing process, where you will conduct an in-depth analysis of needs from different departments. Recognising specific needs for goods and services will eliminate maverick spending and boost organisational profits. The procurement team works with different departments, finds the needs, and sends purchase orders to vendors to acquire the items.

2. Purchase Request

The requisition form is submitted to the relevant departments. These are the internal documents employees use to purchase goods and services on behalf of the organisation. They are created and approved internally within the organisation. The purchase requisition form should include all the information related to the needed goods and services in detail.

The requisition form goes through different stages of approval and is approved or rejected based on the cost and other financial factors of the organisation. If all the purchase requisition meets all the financial criteria, then it is approved, turned into a purchase order, and preferred vendors are notified.

3. Purchase Authorisation

In this step, the accounting team receives the approved purchase orders. They review it again to determine whether to approve or reject it. Once approved, they will allocate a budget for procuring the requested goods and services.

4. Preliminary Evaluation

Pre-screening is an essential step, and performing this can prove to be an excellent cost-cutting measure. Her,e experts will analyse growth projections based on data to see if they can eliminate certain goods or services and replace them with more cost-effective ones. Pre-screening the goods and services will have a huge impact on the organisation’s finances.

5. Meticulous evaluation of each proposal

Before sending the purchase order, it is important to precisely analyse it for optimal performance. If those goods and services are brought regularly, then the time of delivery, product cost, vendor’s reputation, and geographical location play an important role. It is best to ask the supplier to send the payment information before to see if the terms and conditions are acceptable.

6. RFx

Now that the purchase orders are approved and the budget is allocated, the procurement department prepares and sends quotations or proposals to preferred vendors. Vendors submit bids for the proposed offers and send them to the organisation for review.

The bids are analysed based on reputation, compliance and legal regulations, performance history, and quality of goods and services. After careful consideration, the most suitable vendor is selected such that both parties benefit.

7. Contract Finalisation

This is the crucial step in the purchase process where both parties settle down on a contract. Here, the winning supplier will be awarded the contract, where they negotiate to compromise certain terms and conditions until both the buyer and seller are satisfied. After they come to a mutual agreement, the contract is signed and neither party can further negotiate, and the contract is legally bound.

8. Logistics

Once the contract is signed, the vendor should deliver the goods and services within the stipulated time mentioned in the contract. Upon receiving the products, their quality and quantity are checked to ensure that the received goods and services are as per the specifications mentioned in the contract.

9. Triangular Verification

This step is implemented to ensure that there is no fraud and that the contract is fulfilled. The three-way matching system includes the purchase order, goods receipt note, and vendor’s invoice.

These three things are reviewed carefully before the payment is made. This step also enables businesses to save money and document them for future use. Once reviewed, the payment is released, and the products are delivered.

10. Billing Authorisation

In this step, the vendor receives the payment when there are no discrepancies with the received goods and services. If there are any additional charges missed in the purchase order contract or the invoice, the payment is stopped from being approved until further notice.

11. Documentation

The entire purchasing process is recorded from start to finish and is stored in the company’s accounting books. Modifications are updated promptly to use the data for future prediction.

Any tax exemptions are recorded to know if the products and services brought are taxable.

Specifications on any exchange of foreign currency in the purchase order contract, which need to be calculated and expressed in both the base currency and the foreign currency for reference, must be provided.

Challenges in the Purchasing Process

The main challenge that the purchasing process faces is fraudulent practices. Fraud can be extremely disruptive and troublesome – it can take any form of manipulation for dishonest gain. Usually, this happens when the procurement team fails to choose the most appropriate supplier.

Mainly, the frauds in the purchasing process can be inflated invoicing, supply risk, avoiding contract review, sole-source contracting, excluding qualified vendors for personal gain, compromising on the quality of the delivered products, and dark purchasing done outside the defined standards.

The risks happen when there is a lack of visibility and reliability within the department. Sometimes, the payment happens as a favour or valued gift and direct cash payment and doesn’t follow the terms and conditions specified in the contrac,t leading to major fraud.

Purchasing Process Flow Chart

The main purpose of purchasing processes is to procure goods and services that your business needs to run effectively. Here is a simple purchasing process flow chart of a car manufacturing company:

Start

|

Identify Need

|

Create purchase requisition

|

Review

|

Approved? (No —- (again send for review)

|

Yes

|

Select supplier

|

Evaluate supplier

|

Qualified?

|

Send RFQ

|

Receive quotation

|

Evaluate quotation

|

Negotiate terms

|

Create PO

|

Send PO to supplier

|

Supplier accepts PO

|

Plan production

|

Receive goods

|

Inspect

|

Acceptable?

Yes

|

Process Payment

|

End

No ——> Reorder or cancel —–> End

Best Practices of the Purchasing Process

Optimising the purchasing process to modern business trends will make a tremendous difference in your business performance, which is fundamental for your success. These are some of the best practices that you should follow to modernise your purchase process.

Purchase policies

Maintaining standardised purchasing policies plays a significant role in establishing order in the procurement process. Throughout your organisation, multiple departments will have different purchasing needs. They often interact with one another to identify which products and services they need.

Therefore, if your employees are unfamiliar with the purchasing policies, it creates problems. Even if your business doesn’t have one, it’s time to create and define some policies.

KPIs

Key performance indicators (KPIs) measure the effectiveness of your purchasing process goals. They monitor how each department accomplishes the purchasing goals, how the cost is spent on procuring goods and services, and help with continuous improvement. Some common KPIs in the purchasing process include cost savings, risk mitigation, maverick spending, cost of PO, delivery time, purchasing cycle time, supplier lead time, etc.

SMART goals

SMART stands for specific, measurable, achievable, relevant, and time-bound. Setting SMART goals is a smart choice for enhancing your purchasing process. The set goals should align with your organisation’s overall goals and objectives.

The best way to do this is by setting up supporting purchasing goals for each company goal that you accomplish. For instance, the company goal could be to increase profit margin by saving material costs and the supporting purchasing goal could be to decrease spending on tangible items by ten percent in the next financial year.

Strategic sourcing

Sourcing decisions should involve all the critical stakeholders and other important team members. They can contribute key points such as how to better negotiate, which vendor to choose and why, buy-ins, maintaining vendor relationships, etc that make a strong sourcing strategy. It also ensures that all the employees and stakeholders understand the company’s priorities.

Training and development

The employees must be trained to use the purchasing process systems and its policies to enhance productivity, continuously improve, and bring change. A training approach can be created such that:

• All employees receive in-depth training to use the SAAS systems from the vendor.
• A formal training module that contains a knowledge base, tutorials, FAQs, troubleshooting, and questions on policies.
• Each department has a designated trainer, and the training program is made available online.
• Each department conducts periodic training updates.

Implementing a solid training program will have an immense impact on your organization’s business performance.

Balancing centralised and decentralised purchasing

A purchasing process has two different approaches: centralised and decentralised.

The centralised approach ensures that all the purchases in the organisation are handled by the central procurement team. Whereas, under a decentralised approach, each department will have its leader who has the authority to purchase the needed goods and services.

Both approaches have some benefits and drawbacks. Since only a handful of people carry out the purchasing process, it is wise to adopt the centralised approach as it is less risky. However, this is a cumbersome process that leads to delays. A decentralised approach, though, is faster as managers don’t consult with the procurement team it is riskier as it can lead to maverick spending and failures.

You can create a middle approach that is embedded within suitable procurement tools and relevant people to handle the purchasing and decision-making specific to each department can be beneficial.

SaaS technology

There was a time when we printed and mailed purchase orders. Manual purchase orders are difficult to maintain and are time-consuming, especially in today’s competitive digital world. Now is the time you use SaaS technology to your advantage. SaaS products are a game-changer in the purchasing world.

SaaS suppliers like Cflow, Jotform, Zapier, and Process Street offer end-to-end seamless procure-to-pay solutions that include e-procurement, contact management, advanced analytics, recording and tracking company assets, automated vendor listings, automated POs, and much more. Buying SaaS technology is a great way to take your business to the next level.

Automation

Most businesses have switched to using automation to create efficient workflows while maintaining compliance in their purchasing processes. An approval process using procurement automation tools like Cflow:

• A purchase request is raised by an employee and is sent automatically to their department head.
• The department head reviews and approves the request which is then forwarded automatically to the purchasing department.
• The purchasing department reviews and approves the request and begins the sourcing process.
• Now the purchasing department finds a suitable supplier and sends it to the original requester to seek advice.
• The requester now provides suitable feedback to the purchasing department, and the purchase request is converted into a purchase order.

Here is a List of Some of the Best Purchasing Process Tools that you Can Use:

1. Cflow

Cflow is a powerful procurement solution that offers comprehensive functionality to optimise your purchasing workflows. It’s completely cloud-based and its no-code automation makes it easy to implement. Some of its key features include visual form creation, automated PO, budget creation and validation, invoice processing, no login approvals, and much more.

2. Coupa

Coupa offers dedicated AI-driven functionality to cover every aspect of procurement. Some of its key features include PO creation and delivery, real-time budgeting, approval workflows, expense management systems, and compliance management.

3. Precoro

Precoro offers a unique automation solution for managing your procurement processes effectively. This platform enables users to easily set up automated budgeting thresholds, approval routes, and an ERP that brings transparency to your organization.

4. Procurify

Procurify is mainly a procure-to-pay tool that aims to eliminate manual processing. It helps organisations to streamline procurement processes so that employees can focus on other critical tasks. It offers seamless integration, vendor management, contract management, and invoice processing that efficiently manage your purchasing workflows.

5. Responsive, formerly RFPIO

Responsive is a strategic management tool that transforms the way organisations exchange information. It offers unique functions such as efficiently managing RFPs, RFIs, security questionnaires, due diligence questionnaires, risk assessments, contract management, and other complex processes involved in the purchasing process.

Purchase Process Trends 2025

The following are some of the strategies and trends that are capable of shaping the face of the purchasing process in 2024. Knowing these trends will help you to be ready to navigate your purchasing process toward efficiency.

Low-code applications

Risk is inevitable when it comes to the purchasing process, and it can be mitigated if you use proper software. Procurement professionals should reap the benefits of low-code/no-code SAAS tools to successfully continue their digital transformation. Globally, it is estimated that two-thirds of the enterprises have adopted low-code automation tools that can enable users to set up the systems with little technical knowledge.

Procurement resilience

We mentioned earlier about different types of fraud that can happen in the absence of a standard procurement system. Procurement resilience refers to the ability of the company to anticipate, adapt, and overcome any kind of disruptions. Businesses come up with resilience strategies to maintain consistency in sourcing as well as delivering goods and services to customers.

Supplier relationships

Supplier development and relationships should be at the top of every purchasing professional’s agenda. The key to navigating the disruption process would be to plan proactively to ride the waves of disruption. Here, technological solutions like AI, natural language processing (NLP), ML, and data analytics play an integral role.

Cybersecurity

While the rise in technology can provide immense benefits, it equally comes with many challenges. Organisations continue to invest in cybersecurity to keep up with the latest trends to prevent data breaches and strengthen data security.

Mobile procurement

In recent times, mobile procurement has brought the convenience of optimising workflows from your smartphones. Most of the SaaS tools provide mobile applications that can enable remote working, integrated payment solutions, real-time analytics, compliance, and enhanced user experience.

Social and digital procurement

Social and digital procurement have become a transformative trend in recent times and have shaped procurement management completely. Businesses tapped the new avenues of potential supplier discovery, relationship building, supplier engagement, harnessing data, and decision-making using dynamic digital tools.

Compliance

In 2025 procurement professionals continue to grapple with the changing regulations and procedures. Automating compliance is vital for staying ahead of the competition. You could benefit from AI and cloud automation.

Use of AI

AI is taking the world by storm, and procurement is one of the industries that is quickly adapting to using potential generative AI functionalities. AI is expected to make a significant leap forward in the world of procurement by delivering notable benefits, risk management techniques, actionable insights, vendor evaluation, compliance, predictive models, and anomaly detection.

Optimise your purchase process with no-code automation

Cflow is one of the leading procurement automation tools that is designed to efficiently help your business save dollars and spend better through its automation. It is completely cloud-based and has no code, which enables users with non-technical backgrounds to understand and implement it effortlessly.

Cflow’s key features of procurement include an easy-to-operate mobile interface, seamless communication, drag and drop interface, efficient supplier management, compliance, and risk management, cost and time-saving automation, approval workflows, and seamless integration.

Cflow offers a comprehensive procurement platform with end-to-end processing, supply chain management, visibility, execution, and collaboration capabilities that will enhance your business performance. Built on a foundation of cognitive technologies, Cflow stands firm in transforming your business supply chains on a global level to gain a competitive advantage.

Conclusion

Market and technology continue to evolve, and there are new challenges to procurement on the rise. So it is essential to understand the complexities involved in different parts of the procurement process, such as vendor management and contract management to help your business stay ahead of the competition. 

Are these challenges holding back your business growth? Use this guide to implement the best practices, and now is the time to consider upgrading your procurement system. You will need a comprehensive and flexible procurement system like Cflow that will help your organisation streamline its procurement and drive toward consistent performance.

Why wait? Get Cflow today! Visit our site for more information and sign up for a free demo.

Frequently Asked Questions

1. What is the difference between purchasing and procurement?
Purchasing refers to the transactional steps like raising purchase orders and paying suppliers. Procurement is broader and includes strategic sourcing, supplier management, compliance, and cost optimisation.

2. Why should UK businesses automate the purchasing process?
Automation reduces paperwork, speeds up approvals, ensures audit trails, and helps maintain compliance with UK regulations like GDPR and IR35. It also protects against procurement fraud.

3. What are the key steps in a purchasing process?
Typical steps include need assessment, requisition, purchase authorisation, RFx, supplier evaluation, contract finalisation, delivery verification, and payment processing.

4. How can I prevent fraud in my purchasing process?
Implementing a three-way matching system (PO, invoice, goods receipt), vendor vetting, and using automated platforms with approval workflows greatly reduces the risk of fraud.

5. What purchasing KPIs should my organisation track?
Important KPIs include cost savings, delivery time, procurement cycle time, maverick spend percentage, and supplier lead times. These help measure efficiency and guide improvement.

6. How does Cflow support UK compliance standards?
Cflow is built to support GDPR, UK tax regulations, and procurement best practices. It offers audit trails, role-based access, approval routing, and seamless vendor collaboration tools.

7. Can Cflow be used by non-technical staff in my organisation?
Yes. Cflow’s intuitive no-code interface allows employees with no IT background to automate workflows, track procurement, and manage approvals easily.

8. What are the 2024 purchasing trends UK businesses should adopt?
Key trends include low-code automation tools, mobile procurement apps, AI-powered vendor scoring, and data-driven supplier relationship management.

9. Is Cflow suitable for SMEs in the UK?
Absolutely. Cflow is scalable, affordable, and designed to meet the procurement needs of both SMEs and large enterprises in the UK.

10. How do I get started with Cflow?
You can sign up for a free demo on Cflow’s UK site to explore features and customise your purchasing workflows to fit your business needs.

Related Articles

• Modern Procurement Process – Better Business Outcomes and Informed Purchase Decisions
• A Practical Guide on Procurement Process for Improving Performance
• An Imperative Strategy to Build Efficient Purchase Order Workflow
• Purchase Requisition: A Key Component of Effective Procurement
• Why do you need Centralised Purchasing for Your organisation?
• How does Procurement Transformation Drive Sustained Procurement Outcomes?

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