A purchase order is used in companies to keep a track of budgeting, spending, and supplier management. It is essential to create a purchase order in order to record the purchase agreement between a buyer and a seller. Purchase order not only provides clarity but it’s also important in terms of legal processes. It does not matter whether you’re a small business or a big firm, make sure to have a standard purchase order in order to manage all your purchase operations smoothly without any errors or mistakes. Maintaining financial records is easier once there is a purchase order template in place.
Businesses where purchasing is done frequently, it’s essential to have a purchase order to ensure everything is recorded efficiently. In this post, we have provided important information related to the purchase order and of course you can find a variety of purchase order templates for free download.
What is a Purchase Order?
A purchase order is also known as PO, it’s a legal document that is used to authorize a transaction. This document is issued by a buyer or customer to a seller or a vendor or supplier. This document outlines the details related to the items that customer wants to buy, quantities, payment terms, delivery dates, etc.
If you’re running a business then you already know how important this document is and if you’re just starting then do educate yourself about purchase order. You can also call it a way to communicate with the supplier and let them know what you need, how you would receive an order, what would be the payment terms, etc.
A purchase order protects the rights of both buyer and seller because everything is legally recorded. Supplier management is not easy, there are a lot of challenges that comes with it specially related to the payment, logistical delay, shipment issues, etc. It’s important to have a purchase order in place to streamline the communication in a much better way.
Purchase Order Template
What’s Included in Purchase Order Template
The elements of a purchase order may vary from one type of another. But following are some of the details that must be there in a well structured purchase order template:
PO Number: Each purchase order must have a unique PO number that is further used for tracking and referencing orders.
Buyer and Seller Information: The name, address, and contact information of both buyer and seller should be there.
Order Date and Expected Delivery Date: Make sure to mention the date on which the purchase order is issued and mentioned the expected date for delivery of goods or services.
Item Description: Give a brief description of products or services being purchased.
Quantity and Unit Price: Mention the number of items to be purchase and the price per unit.
Total Cost: Give a summary of the total cost of the oder. Mention the taxes, shipping fees, or discounts provided.
Payment Terms: Make sure to mention the payment method used or to be used for payments. Due dates should be clear. Highlight if there are any penalties for a late payment or late delivery of goods or services.
Shipping and Delivery Details: Specify the shipping methods, delivery address, etc.
Approval Signatures: The signatures of the authorized representatives has to be there on the order to confirm the agreement.
Both the parties should properly ready the purchase order before signing or confirming it.
Benefits of Using a Purchase Order Template
There are numerous benefits of using a purchase order templates, some of the advantages are listed below:
- Maintaining records is easier and more efficient. These records can be further used for auditing and financial tracking.
- The chances of errors and frauds decreases once you have a well structured purchase order template in place. There won’t be unauthorized purchases.
- You will have a better idea of expenses which will allow you to control budget in an efficient manner.
- A purchase order is a legal document that protects the rights of both seller and buyer. This document comes in handy in case of legal disputes.
- There will be a better and efficient communication between buyer and seller, there will be less misunderstandings once everything is written on the order template.
Types of Purchase Order Templates
A variety of purchase order templates are available these days because of different businesses. Below we have list down some of the common types:
- Standard Purchase Order (SPO): Used for one-time purchases with pre-agreed terms and conditions.
- Blanket Purchase Order (BPO): Used for recurring purchases over a period of time at a predetermined price.
- Contract Purchase Order (CPO): Created when a long-term contract exists between the buyer and the seller.
- Digital or Electronic Purchase Orders (EPO): Used in automated procurement systems to streamline the ordering process.
How to Create a Purchase Order Template
If you are looking to create a purchase order from scratch then follow the steps below:
- You need to use a spreadsheet, word processor, or procurement software.
- Make sure to include all the necessary fields such as PO number, product descriptions, number of items, and payment terms, etc.
- Make sure to use a professional format, it should be clearly readable and there should not be any confusing terms.
The best way to create a purchase order is to use a pre-designed template. On this page, you can find out a plenty of purchase order templates available for free download in both printable and editable format. You can make changes in the templates as per your business requirements and industry standards.
Conclusion
For businesses, it is essential to use a purchase order template in order to easily create a purchase order to manage procurement efficiently. A purchase order is important to maintain clear records, to ensure efficient communication, to provide legal security for transactions. You will be able to improve the purchasing workflow and establish better relationships with suppliers. A purchase order is one of the most essential business tools or documents that is required to enhance operational efficiency and financial management.