Why open purchase orders jeopardize your financial planning

Norman Rohr
24.02.26
5 min read

Open purchase orders (POs) are a daily part of procurement processes in medium-sized businesses. What sounds harmless, however, often evolves into an underestimated risk for the finance department. When orders are not closed in a timely manner—whether because they were not fully used or simply forgotten—they cast a shadow on reporting that distorts liquidity planning and the profit and loss statement.

This article highlights why consistently closing unused and outdated purchase orders is indispensable for financial management. You will also learn how modern software like finway helps your company maintain an overview of outstanding orders and close them efficiently.

The Problem with Open Purchase Orders

Lack of Transparency in the Ordering System

Many companies operate with a sophisticated procurement process where a purchase order is created for every major acquisition. Initially, this creates structure and traceability. But over time, open POs accumulate—especially when orders are only partially fulfilled or projects are quietly discontinued.

A real-world example: A large software company regularly had a triple-digit number of open purchase orders in its system. Upon closer inspection, the finance team discovered that many of these POs were no longer in use. The requesters had simply forgotten to close them.

Two Core Problems for the Finance Department

When purchase orders remain open even though they are no longer needed, two serious challenges arise:

1. Accruals and Deferrals

The finance department must determine whether an accrual needs to be booked for the unused amount of an open order. Has the invoice perhaps just not arrived yet? Or was the order effectively canceled without being documented in the system? This uncertainty significantly complicates clean bookkeeping.

2. Distorted Liquidity and P&L Planning

Open purchase orders burden the planning process. As long as a PO is listed as “open” in the system, the remaining balance must be accounted for in liquidity planning and the profit and loss statement. This leads to a distorted picture of the actual financial situation and makes sound decision-making more difficult.

Why Closing Unused Purchase Orders is So Important

Clean Financial Reporting

Only when all unused or outdated purchase orders are closed promptly can the finance department ensure reliable reporting. Otherwise, budgets are incorrectly shown as committed, even though the funds could have been used elsewhere long ago.

Better Liquidity Management

An accurate overview of truly outstanding payment obligations is essential for managing liquidity. Open, no-longer-needed purchase orders falsify this overview and can lead to unnecessary financing measures or incorrect investment decisions.

Efficiency Gains in the Month-End Close

The month-end close is a time-critical phase for many finance departments. When numerous old POs have to be manually checked and reconciled, it costs valuable resources. A clean purchase order inventory significantly speeds up this process.

How finway helps you keep an overview

Central Dashboard for All Open Purchase Orders

finway offers a clear dashboard that displays all open purchase orders at a glance. It shows important information such as the requester, the order date, and the remaining balance. This allows you to immediately identify which POs may be outdated.

Regular Review Process with Integrated Communication

The software company from our example established a structured review process using finway. At regular intervals, all open purchase orders are reviewed. Communication with the requesters takes place directly within the platform. This saves time and ensures that nothing falls through the cracks.

Through this process, the company was able to reduce the number of old, unused purchase orders by 95% by the month-end close.

Automation and Reminders

finway helps you automate processes. Reminders for requesters to close purchase orders or update their status can be easily set up. This ensures the topic doesn’t become an afterthought but remains a continuous focus.

Best Practices for Managing Open Purchase Orders

1. Establish Monthly Reviews

Set a fixed date each month to review all open purchase orders. Involve the responsible requesters and clarify the status of each PO.

2. Define Clear Processes

Establish binding rules for when and how purchase orders must be closed. Train your employees accordingly so that closing POs becomes a routine.

3. Use Technology

Modern software solutions like finway take much of the administrative work off your hands. Use these tools to create transparency and relieve your finance department.

4. Assign Clear Responsibilities

Ensure that every purchase order has a clear owner. This person should be responsible for closing the PO as soon as it is no longer needed.

More than just tidiness: Strategic advantages

Consistently closing unused purchase orders is more than just an operational necessity. It lays the foundation for precise financial control and enables better strategic decisions. Companies that have their procurement processes under control can react more quickly to market changes and allocate their resources more effectively.

Furthermore, a clean purchase order inventory strengthens the trust of internal and external stakeholders in your figures. Investors, management, and supervisory boards expect reliable data—and that starts with the proper administration of your purchase orders.

Regain control with finway

At first glance, open purchase orders may seem like a minor organizational detail. But as the example of the software company shows, they can have significant effects on your financial planning. Losing track risks distorted budgets, unnecessary accruals, and inefficient processes.

With finway, you get the tools to systematically monitor and close outstanding purchase orders. The result: more transparency, better planning, and a significantly more efficient month-end close. Invest in a clear process! Your finance department will thank you for it.

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Norman Rohr

Norman ist seit 2024 CEO von finway. Er verfügt über einen Master in International Business (ISM) und einen MBA in Finance & Strategy (Melbourne Business School). Mit über 20 Jahren Erfahrung in der Technologie- und Digitalmedienbranche auf vier Kontinenten ist er ein ausgewiesener Marketing- und Revenue-Experte. Bevor er zu finway kam, hatte er Führungspositionen bei Unternehmen wie Google, SVOX, Pixability, Uberall, Xentral ERP Software und Capmo inne und beriet zahlreiche weitere Firmen.