Defining the Purchase Order Flip
Updated: Oct 25, 2021
In today’s day and age, procurements and the financial accounting involved with them are carried out electronically with the help of automated tools. Because of this, a lot of new terminology has become associated with the procurement process, and the term “Purchase Order Flip” is one of the more relevant of the terms that have become commonly used.
Nowadays, customers can file purchase orders online, which allows said orders to be submitted into the electronic accounts of the suppliers directly. Once the purchase order is received electronically, it can be immediately converted by the supplier into an invoice and returned to the buyer. The supplier’s usage of automated tools to quickly achieve this conversion is what the term “purchase order flip” refers to, and the actual process is commonly referred to as “flipping” a purchase order.
Any business that would use an electronically-automated purchase order flip assumes that whatever information will be present on the resulting invoice will always resemble the purchase order’s contents very closely. Employees working in the supplier’s financial department would have originally been relied on to create an invoice for every purchase order manually. But because electronic procurement can now automate the process behind carrying out a purchase order flip, financial employees are free to concentrate on other financial matters that are important to the supplier. As a result, the business does not need as many paid employees and additional resources to carry out its procurement needs.
However, for many businesses, not every invoice should be created through a purchase order flip. Automated invoice generation assumes that the invoice will match the purchase order without taking any potential surrounding financial factors into account. Therefore, businesses should only use this electronic approach if they have straightforward and direct transaction structures that do not cause some consumers to have to pay more than others.