I am working with a university for the first time. They want to pay me via purchase order, but the process on their end seems to take forever and I don’t get why? Isn’t the money already there and that the school has already given green light for the purchase? What am I missing?
In: 6
All I have to add to the other good responses is that organizations have no incentive to speed up this process. In fact, they gain from having it be as slow as possible. So don’t be surprised if the process continues to drag on after you invoice.
Let’s say I spend 120 million per year on purchasing via PO. If my vendors don’t get paid until 6 months after I get billed, that’s 60 million in delayed cash out–which in finance/accounting terms is free “working capital”. Their incentive is to push it out as far as possible without driving too many vendors away.
Latest Answers