A purchase order template is a document sent from buyers to suppliers and they include a request for an order. A PO template contains basic information like the type of item, the price they agreed on, and the PO number. The more specific your order is, the more details you include, the more effective your purchase order form will be.

Purchase Order Templates

What is a purchase order document?

A purchase order template is a type of document created by buyers which they then send off to sellers. It’s a summary of goods and services which the buyers plan to purchase from suppliers. A purchase order sample contains a list of goods or services, the quantity, and the negotiated price.

As soon as the buyer and seller agree with the information on the order form template, it becomes a legally binding document between both parties. This means that the buyer must be very explicit and clear when communicating requests. That way, there doesn’t have to be any confusion when suppliers receive the sample purchase order.

Typically, a buyer would create two PO templates for sending – one internally and one externally. The internal PO goes to the company’s accounts payable department so they can match the information with the information on the future invoice. The identical external PO goes to the supplier.

Either way, a purchase order form includes the following information:

  • The issue date of the purchase order.
  • The buyer’s name and address.
  • The supplier’s name and address.
  • The PO number.
  • Details about the goods and services to order.
  • The terms and conditions of the transaction.

The order form template is essential for buyers who need to purchase goods or services from vendors, sellers or suppliers. Even though creating a PO might seem like redundant extra work, especially when you own a small business, purchasing demands might change as the relationship between the buyer and seller evolves.

As demand decreases or increases, becoming more complex, urgent or specific, and with potential communication mistakes, discrepancies might come up between what the buyer expected and what the seller sent.

But sending a purchase order sample helps make clear the expectations so there’s no confusion. This simple situation shows how useful POs are for any businesses planning to purchase goods or services from suppliers.

Sample Purchase Order

How does a purchase order work?

Once you make a sample purchase order and both parties agree with it, the document becomes a legally binding one. It contains the details about the items the buyer had agreed to purchase at the agreed-upon price. It also contains an outline of the delivery date and the payment terms.

Both a purchase order template and a PO computer system can make the purchasing process easier and more efficient. The document also allows for better payment tracking and inventory. Buyers typically use a PO template when they need to purchase items or inventory an account.

Upon agreement, the supplier then ships or delivers the items purchased by the buyer before payment. In such a case, the purchase order serves as risk protection. PO provides legal protection and it is important for payment tracking and inventory management. This document also helps suppliers compare the inventory ordered to the shipped inventory to ensure accuracy.

These documents also allow suppliers to keep track of which payments they have received. Buyers would hold a copy of the PO to keep track of expected orders and when they should arrive. This is basically how a PO works. Then it starts moving from one place to another:

  • Submitting the purchase order
    The buyer prepares the PO – the purchasing department usually does this. The people in charge use electronic software systems to allow for better monitoring and submissions to suppliers. The purchase order form should include a PO number to match their purchases with shipments.
    The form would also include the shipping date, shipping address, billing address, and the details about the ordered items. Electronic software programs already come with entry fields for this information and so do PO templates. So all you have to do is input the required information.
  • Processing the purchase order
    As soon as the buyer submits the PO, they create an in-progress purchase. The status of the order remains as “in-progress” until the buyer receives the items. As soon as this happens, the items get scanned into the buyer’s inventory then matched with the information on the PO.
    Then the document gets marked either as requiring payment or processed. When the buyer remits payment, this completes its responsibility in the whole process. In order to ensure the accuracy of credit for payment, include the PO number on the payment document.
  • Supplier uses the purchase order
    Suppliers utilize POs for payment processing and order fulfillment. As soon as the seller receives the purchase order sample, it uses the details on the document to pull out the ordered items for packaging and delivery. After this, the seller creates an invoice based on the items prepared.
    Before shipping the products, the seller should first record the shipment in the inventory system. Then the seller marks the order as awaiting payment or filled. Then the seller sets important deadlines and reminder dates. A PO is important for sellers to ensure good monitoring of payment and credit policy enforcement.

How to use a purchase order template in business

Simple as a purchase order template is, it is extremely useful. If you want to understand this document, you should take some time to observe the current business practices. Then you can start envisioning how you can control what the company or the employees buy and how to process purchase transactions. Here are some tips for you:

  • Integrate requisitions and POs
    If your company currently doesn’t use POs, there’s a high likelihood that you can’t effectively manage the requests made by your employees when they need to purchase something for the office. But using a sample purchase order allows for more efficient purchasing, better control, and improved visibility in terms of company spending.
  • Create your PO
    In most cases, employees need a PO for items, equipment or stocks they need to continue doing their job well. A lot of organizations just allow their employees to send an email when they need to request something. When the supervisor approves, the employees can purchase the items on their own.
    This isn’t an efficient process and it might tempt employees to request for things they don’t actually need. But when you create a purchase order template for the company, this allows you to keep track of all these requests and all of the purchases made by your company.
  • Use it to create your budget
    When employees start drafting purchase requisitions, you can come up with an estimate of your monthly expenses and keep track of what the employees purchase regularly. In doing this, you can also start making an analysis on how employees use supplies and see if you can come up with ways to save.
  • Get discounts on volume purchases
    When employees submit requisitions, you can start identifying your employees’ purchasing patterns. Then you can start purchasing items in bulk in order to get discounts from suppliers. Also, learning these patterns allows you to expect what your employers will need for the next month so you can order supplies beforehand.
  • From a requisition to a PO
    When requisitions have become a standard procedure in your company, the next thing to do is to come up with a PO process. This process makes things easier – all you have to do is contact suppliers and inform them that for the next purchases, you plan to submit a purchase order form before you send payment.
    Once you have approved the requests of your employees, the purchasing department creates a PO then sends it off to the supplier. If necessary, the supplier communicates any issues or concerns with the information on the PO. If there aren’t any issues, the supplier starts preparing the orders for shipping.
    Using both a requisition (before approval) and a PO (after approval) can help increase your ability to keep track of expenses and reduce the stress that typically comes with the process of purchasing.

Purchase Order Forms

How does a purchase order template differ from an invoice?

As aforementioned, a PO is a document created by a buyer’s company then sent to a vendor, supplier or seller to confirm a purchase. Simple as this document may seem, it helps clear up logistical confusion in the purchasing process. A purchase order comes from a buyer who wants to ensure that they get exactly what they order.

Conversely, an invoice comes from the vendor or supplier, the party who wants to ensure that they receive payment after providing the goods ordered by the buyer. Vendors send an invoice right after the approval of the purchase. It typically includes the reference number written on the PO. That way, the buyer’s finance department checks to make sure that the information on the PO and invoice are the same.