Purchase Order

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Summary #

A purchase order is a legal document form used by a buyer and sent to a supplier/seller for an order. A purchase order specifies items, quantities, prices, and credit terms for a purchase from the vendor. A PO becomes a legally binding contract when a vendor accepts the purchase order.

What is the Main Purpose of a Purchase Order? #

The main purpose of a purchase order from a buyer is to initiate a business order for specific goods or services with a vendor. An approved purchase order states the agreed terms and offers legal protection for both the customer and the vendor selling the ordered items.

• Purchase order items, quantity, and prices (and receiving information) are matched with an invoice by the customer to ensure that the items have been ordered and billing is correct before paying the vendor.

Purchase orders are sequentially numbered and provide an audit trail in the system.

Sample #

Process #

Customer is Buyer here.

Conclusion #

PO -> initiate a business transaction between buyer(*) and seller invoice -> transaction is complete, goods or services delivered, now it is time for buyer to pay money to seller, invoice is a legal document that rep that.

OCR of Images #

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Your Company 123 Street Name Your City, ST 12345 (123)456-7890 Purchase Order P.O. number 12345678 Customer ID #123456 Date 1/15/2022 Delivery date 2/1/2022 Ship via Shipping company Terms Shipping & payment terms Vendor Name Company name Street address City, State, Zip (123)456-7890 no.Teply@example.com Ship to Your Name Your Company 123 Your Street Your City, ST 12345 (123)456-7890 no.Teply@example.com Item # 12345-1 12345-2 12345-3 12345-4 Note 1 Note 2 Note 3 Description Item 1 Item 2 Item 3 Item 4 Qty 2 3 2 2 Unit price Total price $45.00 $55.00 $65.00 $25.00 Subtotal Discount (%) Subtotal Less Discount Shipping & handling $90.00 $165.00 $130.00 $50.00 $435.00 $435.00 $15.00 8.60% $37.41 $487.41 Tax rate Sales taxi Total Approved By: Authorized Signature Date

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Create a purchase order for the selected vendor 1 Close PO 10 Customer pays the approved vendor invoice Purchasing approves the PO 2 9 The PO Process Customer approves the invoice Send the PO to the vendor 3 8 Vendor Confirms acceptance of the received PO Customer completes 3-way matching of documents 4 / Customer receives ordered goods/services Vendor invoices customer for 6 products/services delivered 5