In case you run a distribution enterprise, you already know the drill: clients usually reject invoices resulting from buy order and bill discrepancies, resetting their fee phrases whereas tying up your working capital at 9%+ curiosity.
Let’s discover how a mid-sized distributor solved this by scaling their buy order-sales order verification course of earlier than delivery – with out including headcount or disrupting current workflows.
The true value of order discrepancies in distribution
Order discrepancies usually slip by means of to post-shipping discovery. It is inevitable whenever you’re processing hundreds of orders month-to-month. However when your buyer rejects an bill as a result of their buy order (PO) would not match your gross sales order (SO), they are not simply making a headache — they’re holding onto your working capital.
For one mid-sized distributor processing 4,000 orders month-to-month, this meant vital prices and strained accounts receivable cycles. Their accounting group might solely manually confirm SOs in opposition to POs when the worth exceeded $10,000, leaving most shipments susceptible to expensive discrepancies.
At present rates of interest above 9%, each delayed fee hit onerous. As soon as supplies are delivered, clients have zero urgency to repair these points. Every bill revision resets fee phrases, making a expensive cycle of delays and dealing capital constraints. Past that, these discrepancies might additionally frustrate clients and probably result in the lack of future enterprise.
💡
Why stopping order discrepancies is extra complicated than it appears
In distribution, matching POs and SOs is not nearly evaluating numbers. Your clients would possibly listing 10-inch 600-pound stainless-steel whilst you present 10-inch 600# SS. Some ship two-page POs, and others ship 60 pages with elaborate phrases and situations. Add a number of plant areas, various fee phrases, and lot cost orders — verifying orders earlier than success turns into more and more difficult.
The distributor’s order processing workflow earlier than automation was typical of many industrial suppliers.
Order discrepancies create expensive downstream issues
Past the apparent time constraints, manually evaluating SOs in opposition to POs created a number of downstream issues that worsened over time.
This is what was taking place:
- Solely orders above $10,000 might be manually checked — leaving most orders unverified
- Every guide matching took half-hour of senior accounting supervisor’s time
- Smaller orders had been shipped with out correct verification, carrying hidden dangers
- Discrepancies surfaced solely throughout invoicing, resulting in bill rejections
- Working capital and accounts receivable tied up for 60-90 days at ~9.5% curiosity
- Points found after delivery when clients had no urgency to repair
- Technical half descriptions diversified between clients and inner methods (Instance: ZP vs zinc plated), complicating guide checks
- A number of delivery areas shared zip codes however wanted totally different gate numbers, risking supply errors and dear reshipments
The time and price funding was substantial. As an example the accounting supervisor is making round $60.44/hour (median hourly wage for the function within the US) — that is a senior expertise you are paying to match POs line by line manually. For this distributor, with 734 high-value orders yearly and half-hour per verify, that meant burning by means of $22,181 simply on guide verification. And we’re not even counting the hours spent chasing corrections and different extra duties.
Moreover, the fee clock resets at any time when a buyer rejects an bill resulting from a discrepancy with the PO. So, at 9.5% curiosity, a 60-day delay on a single $10,000 order value them $158 in curiosity alone. Now multiply that throughout a whole lot of orders. All of the sudden, these minor verification points are bleeding tens of hundreds in curiosity prices yearly.
The distributor knew they wanted to catch PO-SO discrepancies earlier than delivery—once they nonetheless had leverage to get points fastened. However any answer wanted to work alongside their current order processing and success workflow, not exchange it. That is once they approached us at Nanonets.
Are order discrepancies hurting your money circulate?
▼
Are order discrepancies hurting your money circulate?
Let’s focus on how this distributor prevented expensive discrepancies whereas sustaining their current workflows. We’ll stroll you thru their implementation journey, the APIs and integrations, the particular outcomes, and how one can obtain comparable outcomes with out disrupting your gross sales course of!
How we automated PO-SO matching
On this distributor’s case, automating order verification required vital change administration. Whereas we might automate all the workflow from order entry to delivery, we knew that might contain retraining the gross sales group and disrupting established processes.
That is why we started by automating how they verified their gross sales orders in opposition to buy orders.
We realized we might ship fast worth right here. Nanonets built-in with the distributor’s Enterprise Edge ERP and doc administration system – streamlining buy and gross sales order seize. This manner, the gross sales groups might hold their current workflow whereas the automated order matching ran within the background, catching discrepancies earlier than they grew to become expensive issues.
Right here’s what the workflow appeared like:
- Gross sales group receives buy order and creates gross sales order as common
- Buy order will get uploaded to their doc administration system
- Our system robotically detects new buy orders
- System pulls corresponding gross sales order particulars from Enterprise Edge
- System verifies gross sales order particulars in opposition to buy order
- Discrepancies get flagged earlier than delivery
- Order processing group receives alerts for overview
- All verifications get logged for monitoring and evaluation
The implementation course of
Working with the distributor, we took a phased method. We began with their highest-value orders above $10,000. This allowed them to benchmark our system in opposition to their current guide verification course of whereas minimizing danger. Additionally they categorized their clients primarily based on verification wants — some required actual matches on each area, whereas others primarily targeted on totals and portions.
We labored with the distributor to coach our system to deal with these PO-SO variations. This included:
- Dealing with complicated layouts, codecs, and emailed orders
- Managing a number of plant areas
- Understanding numerous product descriptions
- Processing totally different fee time period codecs
We arrange a number of each day checks throughout enterprise hours (7:30 AM – 4:30 PM CT). The system periodically checks for brand new buy orders, pulls the corresponding gross sales order particulars from Enterprise Edge, and runs the verification course of — all within the background.
The system then robotically flags points primarily based on severity:
Important points requiring fast consideration:
- Whole quantity mismatches
- PO quantity discrepancies
- Cost time period variations
Non-critical points for overview:
- Transport element variations
- Line merchandise matches
- Tackle format variations
This new automated workflow helped centralize their verification course of, with a devoted order processing function dealing with all system alerts. This ensured constant processing of flagged objects and exceptions whereas sustaining effectivity.
The impression of automated PO-SO matching on order processing
Inside 90 days, we helped them obtain a 90% STP (Straight By Processing) charge — the proportion of orders being verified robotically with none guide intervention — and 90% accuracy in information extraction and matching. This was a major enchancment from the preliminary 70-75% accuracy charge throughout early implementation.
The outcomes had been transformative:
Operational enhancements:
- Simply processing 17-18 information each day by means of automated order matching
- Error charges decreased to only 1-2 points per batch requiring guide overview
- Automated checks operating all through enterprise hours (7:30 AM – 4:30 PM CT)
- Deal with complicated distribution eventualities like will-call orders and a number of delivery areas by means of customized guidelines
- Automated order matching protection expanded to all incoming orders – no extra $10,000 threshold
- Early PO-SO verification smoothed out downstream 3-way matching processes
- Diminished order cycle time from receipt to delivery
Monetary and money circulate impression:
- Catching buy order and bill discrepancies earlier than delivery — when fixes are simpler
- Cost delays decreased by means of pre-shipping verification
- Diminished publicity to 9.5% rates of interest on delayed funds
- Senior accounting expertise redirected to strategic work
- Higher working capital administration by means of quicker bill reconciliation
- Curiosity prices minimized by stopping 60+ day fee delays
Course of enchancment:
- Centralized processing by means of devoted order processing function
- System robotically flags points primarily based on severity
- Actual-time alerts despatched to related group members
- Complete monitoring by means of Energy BI dashboards
- Customized validation guidelines for particular buyer necessities
- Automated exception flagging and evaluations changed guide line-by-line matching
The success led the distributor to create a devoted order processing place, dealing with the small share of orders that wanted human overview. This streamlined method maintained each the excessive STP charge and accuracy whereas scaling to deal with their full order quantity.
Able to automate your order processing end-to-end?
▼
Able to automate your order processing end-to-end?
PO-SO matching is simply the place to begin. We will help automate your complete order processing workflow — from gross sales order creation to success and delivery. Ebook a demo at present to see how we will help you.
