1. The Real Financial Impact of Open POs

When POs remain open beyond their useful life, they create misleading financial records and significantly reduce the effectiveness of procurement as a strategic function. Research across procurement organizations shows that many of these financial inefficiencies originate from systemic procurement challenges such as supplier reliability issues, approval delays, and fragmented purchasing processes. Companies with mature, streamlined procurement operations often achieve 15–25% cost savings — savings that quickly disappear when POs stay open indefinitely.

2. Operational Bottlenecks and Productivity Loss

Procurement delays ripple through operations. A slow PO process can increase time-to-market by up to 40%. Whether it’s a marketing tool, a software license, or a critical component for production, stalled purchases create downstream stalls that compound over time. Many of these bottlenecks align with the operational barriers highlighted in 2025 procurement research, including tech fragmentation and manual workflows.

Employees spend more time chasing approvals, clarifying requests, and managing workarounds — and less time on the work that drives business value. Much of this inefficiency comes from unclear policies, inconsistent processes, or fragmented vendor management across departments.

3. Compliance and Audit Risk

From a compliance perspective, open POs represent weak internal controls. Auditors often flag these as potential unrecorded liabilities or incomplete financial transactions. In companies subject to SOX requirements, unmanaged POs are a direct threat to financial reporting integrity. Organizations must apply strong internal controls as defined in SOX compliance frameworks to ensure procurement transactions remain accurate and defensible.

Vendor proliferation — dozens of suppliers for the same product category — increases exposure to non-compliant vendors, poor documentation, and inconsistent contract performance. Research into strategic vendor consolidation shows that reducing and rationalizing suppliers strengthens compliance, improves pricing, and reduces operational risk.

4. Why These Backlogs Happen

Procurement backlogs almost always tie back to systemic gaps:

• No clear procurement policy or lifecycle steps
• Misalignment between company size and process complexity
• Overreliance on manual emails/spreadsheets
• Poor internal communication or one-time policy announcements
• Vendor lists that have grown unchecked over the years

5. Actionable Best Practices

Executives can eliminate procurement backlogs by strengthening governance, communication, and automation. The most effective organizations do the following:

Define a Clear PO Lifecycle

• Set explicit closure triggers (final receipt + final invoice + reconciliation)
• Assign ownership for closure (typically Procurement or AP)
• Enforce closure within a defined number of days

Consolidate Vendors

Most companies can reduce vendors by 50% with zero operational disruption — instantly improving pricing leverage, compliance, and process speed. Vendor consolidation also aligns with best-practice guidance from industry analysts.

Automate Approval and Closure

Even lightweight procurement systems significantly reduce errors and manual follow-ups while enforcing standards consistently across teams.

Track the Right KPIs

To monitor and improve performance, organizations should measure the KPIs that matter most. A comprehensive list of procurement KPIs is available in the NetSuite guide on procurement performance metrics.

Conclusion: PO Closure = Value Realization

Closing POs isn’t the end of the process — it’s the moment when value becomes real. It ensures accurate financials, protects cash flow, strengthens supplier relationships, and gives executives the visibility they need to make decisions grounded in trustworthy data.

In today’s competitive environment, organizations that proactively manage procurement — all the way to PO closure — achieve greater operational stability, stronger financial discipline, and a measurable strategic advantage.