What is a Purchase Order?
A purchase order is a legally binding document made between a supplier and a buyer, detailing items that the buyer has agreed to purchase at a set price. It also specifies a delivery date and the terms of purchase. Purchase order are most often used when the buyer wishes to purchase inventory or supplies on account.
Why do you need to use Purchase Order?
The purchase order serves many purposes beyond acting as the initial agreement between the buyer and the supplier.
- Certain financial audits require you to show evidence of the purchasing decisions of the company. Purchase orders are legal contracts that can help you in financial audits.
- Businesses use purchase orders to ensure their spending stays within budget. Without purchase orders tracking expenses and accessing reports is more difficult and prone to human errors.
- Having a well-crafted purchase order system makes inventory and shipping management simpler. It helps monitor purchase tracking, identify what products are being sold and coming at any time.
When do you need to use Purchase Order?
A purchase order is used at the start of the process when a buyer wants to purchase the supplies. It outlines the details of exactly what the supplier will be required to deliver the item. In other words, a purchase order is crafted before an invoice is sent to the buyer.
What are the main things that go on this form?
Generally, all purchase orders should contain the following details for each supply being purchased:
- A Purchase Order (PO) number
- The quantity of each item/services
- The price of each item/services
- Contact information for the customer
- Payment details
- Description and quantity of goods/services ordered
- Invoice and delivery address
- Any additional information such as discounts etc
What are the most common mistakes to avoid?
There are three common purchase order mistakes which you need to avoid:
If you are buying something, you need to check if it is in a good and working condition. If the supplier delivers damaged goods, you are under no obligation to accept damaged or faulty items. This is why it’s extremely important to check the goods before you accept them.
Not Checking for Discounts
The supplier that is not willing to offer you any discounts is probably not the best to work with. Before start working, make sure if there is any discount on a bulk order? Are they offering free shipping? Will they take responsibility for any damaged goods? If the answer to these questions is YES, go for it or else stop working.
Going over Budget
If you are a startup or small business, going over budget is usually an issue that may cause a financial disturbance in your business. Make sure you regularly update your budget and communicate it with your sales and supply chain team, and everyone should be on the same page regarding the purchasing of the supplies.
Do I need to use a lawyer, accountant, or notary to help me?
You can easily make your purchase order online without hiring any lawyer, accountant, or notary. Using a tool like ours creates a legally binding form, and saves you money because you don’t have to hire a lawyer.
Why use our Purchase Order generator?
Form Pros uses advanced encryption standards and therefore ensures the confidentiality of your data. Our personal data is 100% secure & private when creating documents with Form Pros. Our tool has a subscription plan so you can create unlimited Purchase order Forms at a low cost.