Frequently Asked Procurement Questions & Answers

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Frequently Asked Questions in Requisition, Procurement, AP Automation, and Expense Management

What is Procurement

Procurement is the act of obtaining or buying goods and services.

What is a Purchase Order

A purchase order is a commercial document issued by a buyer to a seller, indicating types, quantities, terms, and agreed prices for products or services.

What is Enterprise Grade

Enterprise grade describes products that integrate into an infrastructure with a minimum of complexity and are robust and scalable across a large organization.

What is a Dashboard

Dashboards often provide at-a-glance views of KPIs (key performance indicators) relevant to a particular objective or business process.

What is a Change Order

A change order is work that is added to or deleted from the original scope of work of a contract or purchase order.

What are Committed Costs

Committed costs are the costs which have not yet been paid, but an agreement, such as a purchase order or contract, has been made so that the cost will be incurred.

What is cXML

cXML (commerce eXtensible Markup Language) is a programming language designed to standardize the communications between procurement applications and eCommerce suppliers.

What is Requisition

A requisition is a documented way to request an action or item for delivery by a certain date, department, or individual.

What is a Guided Buying Catalog

A guided buying catalog is an internal catalog of products and/or services containing items of your choosing organized by vendor, department, and type of item, among others.

What are Approval Rules

Approval rules are rules the company establishes to cover its purchasing activity. Rules may cover such things as approval dollar limits, routing, individual approvers, escalation conditions, and so on.

What are Position-Based Approvals

Position-based approvals are a quick way to establish an approval routing process based upon the initiating user’s role in the company. For example, you may establish an approval routing that applies to all AP clerks and a separate routing for inventory buyers.

What is a Check Request

A check request is a request for vendor payment that does not initiate from a purchase order.

What is Variance Tolerance

Variance tolerance refers to the accepted variance of quantity or cost when there is a difference between what was ordered, received, and invoiced.

What is a Packing Slip

A packing slip/packing list is a list of what is included in a shipment, typically provided by the vendor.

What are Accruals

Accruals are the values of goods or services that an organization has received, but where the supplier has not yet sent an invoice. If the invoice has not arrived by the end of the accounting period, then they enter a journal to account for this cost.

What is PunchOut

A PunchOut site is an eCommerce website that lets your buyers make purchases from a supplier’s website accessed directly through your own eProcurement software. It was named for the “punching out” action taken by the buyer organization as they exit their company’s system and link to the suppliers’ web-based catalogs.

What is Vendor Self-Service

Vendor self-service allows vendors to view, add, and maintain select information which may include purchase orders, invoices, bid responses, and contact information, among others.

What is a Vendor Invoice Portal

A vendor invoice portal is another term for a vendor self-service portal.

What is SaaS

Software-as-a-Service is a method of software delivery that allows data to be accessed from any device with an internet connection and web browser.

What are Requests for Quote

A request for quote (RFQ) is a type of procurement solicitation in which a company asks outside vendors to submit a quote for the completion of a specific task or project.

What is OCR

Optical Character Recognition (OCR) technology scans a paper or electronic document, usually an invoice, and turns it into metadata that can be used to populate fields in a database.

What is Invoice Matching

Invoice matching is the process of the accounts payable department matching a vendor invoice, PO, and product receipt information.

What is Two-Way Matching

Two-way matching refers to matching the price/quantity information on the invoice to the price/quantity information on the purchase order.

What is Three-Way Matching

Three-way matching refers to matching the price/quantity information on the invoice to the price/quantity information on the purchase order. You then, also, match the quantity information on the invoice to the quantity information on the product receipts associated with the invoice.

What is Role-Based Security

Role-based approvals are a quick way to establish an approval routing process based upon the initiating user’s role in the company. For example, you may establish an approval routing that applies to all AP clerks and a separate routing for inventory buyers.

What is Ad-Hoc

Ad-hoc means formed, arranged, or done for one particular purpose only. It comes from Latin, meaning “for this.” When applied to the approval process, it refers to a one-time change to the normal approval process.

What are Approval Rules

Approval rules are rules the company establishes to cover its purchasing activity. Rules may cover such things as approval dollar limits, routing, individual approvers, escalation conditions, and so on.

What is a Multi-Currency Transaction

Simply stated, multi-currency transactions are those that involve any currency other than US dollars.

What is Direct Spend

Direct spend refers to purchases of goods and services that are directly incorporated into a product being manufactured.

What is Indirect Spend

Indirect spend refers to purchases of goods and services that are not directly incorporated into a product being manufactured.

What is a Vendor Contract

Ad-Hoc means formed, arranged, or done for one particular purpose only. It comes from Latin, meaning “for this.” When applied to the approval process, it refers to a one-time change to the normal approval process.

What is Approval Routing

Approval rules are rules the company establishes to cover its purchasing activity. Rules may cover such things as approval dollar limits, routing, individual approvers, escalation conditions, etc.

What is 1099

The Form 1099-MISC, also simply called 1099, is a tax form that the IRS uses to track miscellaneous income. Specifically, it tracks payments made to an individual or unincorporated business so that their income can be accounted for at the end of each year.

What is an Audit Log

An audit trail (also called an audit log) is a security-relevant chronological record that provides evidence of the sequence of activities that have affected at any time a specific operation, procedure, or event.

What are General Ledger (GL) distributions

GL distributions are used to define how an expense amount will be accounted for, such as how the expense, asset, tax, or charges will be encumbered on the purchase order or accounted for on the product receipt or vendor invoice.

What is an Audit Trail

An audit trail refers to the documented flow of a transaction.

What is Materials Management

Materials management is a core supply chain function and includes supply chain planning and supply chain execution capabilities.

What is Inventory Management

Inventory management is the supervision of non-capitalized assets (inventory) and stock items.

What is Replenishment

Inventory replenishment, otherwise known as stock replenishment, refers to the process of inventory moving from reserve storage to primary storage, then onto picking locations.

What is a Non-PO Invoice

A non-PO invoice is an invoice used to make a payment to a supplier when a PO is not required/used. Payment for a non-PO invoice typically is initiated with a check request.

What is OFX

Open Financial Exchange (OFX) is a unified specification format for the electronic exchange of financial data through the Internet, and between or among financial institutions, businesses, and customers.

What is a Nonrecoverable Tax

A nonrecoverable tax is an indirect tax paid on the purchase of goods or services. These taxes are accrued and added to the purchase order price of the goods or services.

What is a Recoverable Tax

A nonrecoverable tax is an indirect tax paid on the purchase of goods or services. Taxes can be claimed as a credit against the taxes that are payable by the taxpayer.

What is Intercompany Accounting

Intercompany accounting is the process of recording financial transactions between different legal entities within the same parent company.

What is Unmanaged Spend

Unmanaged spend is spending that is not under the direct control of the procurement department.