Purchase Order Template

Business-in-a-Box's Purchase Order Template

Understanding Purchase Order Templates

Running a business could be challenging when you have no controls, and often when you start a new business the focus is on getting the job done as soon as possible with as much profit as possible. For the most part, it is the way it goes in the current economic environment. However, as you grow you need a firm grasp on the finances of your business to keep your organization going in the right direction. These controls are based on how the money flows in your business and that is where documentation like purchase order templates and invoices and receipts make your life a lot easier.

There is only one way to make sure that you always have the stock you need to fulfill your clients' requests and keep some cash flow in your bank to keep the business running, and that is a proficient purchase order system. That system starts with a purchase order template that you can use for all your suppliers and helps you keep track of your orders and invoices.

Why You Need Purchase Orders

Most business owners are focused on getting orders and getting the job done, and many of them do not want more paperwork to slow down the process of earning a profit. But a clear and precise paper trail helps you make more money and spend less, or at least only spend when you need to.

When you order inventory from your supplier, a purchase order is the only way to ensure that you provide your supplier with a legally binding document to provide the inventory. It will keep your records of what you have ordered, so that in the event of system crashes you have a paper backup to keep on doing business. With any accounting system, you must keep proper records to maintain tight controls on your expenditure and orders, not to mention these documents will help you reconcile your monthly operations.

A comprehensive paper trail that includes purchase orders will also help you with arranging payment terms with your supplier so that you can better manage your cash flow and business finances. This will help your business provide a higher quality of service delivery to your clients as well as sustain your business during tough economic periods.

What is a Purchase Order?

A purchase order template is a legally binding document that gives your supplier the details of your order. The purchase order (PO) also has your company details and payment details on it to provide your accounting staff with a clear reconciliation of where you have been spending your corporation’s money. The most common field on a purchase order are:

  • Your Company Details - company name and physical address as registered with your jurisdiction. These details will include relevant TAX numbers and company registration details.
  • Suppliers Details - suppliers name and address which will include the TAX number and registration details.
  • Shipping Details - physical address details where your supplier must ship the inventory to.
  • Inventory Ordered - full details of the inventory you are ordering including quantities and cost per item.
  • Payment Details - if you have any payment terms arranged with your supplier these details are included in your purchase order.
  • Purchase Order Number - probably the most important detail on the document. This number allows you to track your orders using a simple number sequence.
  • Authorizing Signature - the most important security feature of our templates, the company officer that authorizes the purchase order will sign the document before it gets sent to the supplier.
  • Delivery Date - it is crucial to keep track of when you order your inventory and when it needs to be delivered to maintain your service delivery to your client.

These are the standard details that are included on the purchase order template, but as with all our templates, you can edit the details listed on the document to your specifications.

Process flow of a Purchase Order

The simplest process of a purchase order is when you order stock, the purchase order will be completed by the relevant person in your company and get the document approved and authorized by senior management. This document will then be sent to your supplier and they will ship the inventory to your offices. Upon receipt of the order, you will match your purchase order and supplier invoice to confirm the correct details have been transferred on to the invoice. These details must include the PO number and the correct costs so that you can keep a track of the order in your system. Depending on your internal processes, this system will provide you with a comprehensive system to prevent incorrect orders and over expenditure.

Having purchase orders in your business will also maintain a clear order trail for your inventory, especially when you have multiple suppliers and large amounts of line items that you order.

The Benefits of Using Purchase Order in your Business

Purchase order templates will help you achieve a range of benefits in your business. Although it might seem like just another cog in the wheel that might slow your business down, the opposite is the reality. Here are some of the major benefits of using a Purchase Order in your company.

Save Time

Creating a purchase order system might take a couple of minutes and it takes a few minutes to generate a purchase order for your business, BUT, in the long run, you will save countless hours of precious time when your orders arrive and in reconciling your orders for the month. Being able to physically check your supplier's invoice against your purchase order saves your staff time and you can get more done for your client in the long run.

Budgeting and Planning

When working with large projects, purchase orders will help you plan the budget and roll out. Using purchase orders will ensure that you calculate the quantities and costs before you place the order. This will ensure that you have a clear picture of your budget and are able to prevent overruns and excess spend. This will keep your company lean and streamlined, making you more efficient. Being able to plan is also a huge benefit of having purchase orders. With the back records of your order, you can see your order habits and be able to plan for your annual budget better.

Eliminate Incorrect Orders

If you have ever had a mix up with your supplier when you ordered inventory over the phone and got the wrong stock, then this purchase order template is the answer. Every business owner has had this experience and the only way to eliminate this is by having a purchase order system. With a purchase order, you can reference the order details at any time during the order process as well as keep track of your delivery schedules and payments. Both you and your supplier will know exactly what is in order and when it will be delivered.

Legal Protection

The purchase order template is a legally binding document, and it protects both your company and your supplier when it comes to pricing and quantity on order. You will have a record of your orders that is referenceable and legal so that you can make sure you receive the correct items every time. Your supplier will have the details of what to deliver as well as where and when not to mention they will have their own records of what you ordered. The reason for this is so that if there are any problems, your collective accounting departments can find and rectify the problem fast.

Track Orders and Spending

Each purchase order has a number, and this sequence of numbers will assist your payment department and warehouse to track the orders so that you know what you have in stock and what is still outstanding. At any point in time, you can double-check your ordering system and see what inventory you require and will also help with stock holding. Your warehouse will eliminate double orders and keep your stock down to the preferred levels. This will make sure that you do not overspend on inventory that is going to sit in your warehouse for long periods of time, restricting your cash flow.

Improved Inventory Management

Having a clear ordering system with a purchase order will give your warehouse staff the ability to manage the inventory more effectively. With a clear automated ordering system, you can generate purchase orders when your stock levels reach a minimum point, and you will always have the stock on hand to service your client on time. This will also make your inventory system more efficient and easier to manage.

Internal Organization of Multiple Projects

Managing multiple projects for your business requires many aspects to come together so that you can deliver on all the projects when you need to. Using a purchase order system will allow you to manage these processes far more efficiently and put a smile on your client’s faces. You will be able to check up on orders when you need to just by referencing your purchase orders and get your inventory ready for delivery to your clients on time.

Clear and Detailed Communication

Using purchase order templates will allow for crystal clear communication with your suppliers at all times. Our purchase order template has all the relevant details ready for you to edit and complete. These details give you the peace of mind that you have placed the correct order with the right supplier. It will also give your supplier the full details of your order as well as pricing and payment details so that they can make sure their invoicing is correct to prevent payment issues.

Track Payments and Delivery

With a proper purchase order, you can track your payments and plan for these payments correctly. When you use a purchase order to order your inventory, you have the payment details for your payment department ready when they need it, and you have the delivery details like address and date listed on the order. This makes tracking your inventory simple and convenient.

Vital verification during Financial Auditing

A Purchase Order system forms part of a comprehensive financial accounting system in your company, by using this Purchase Order template you will be implementing a crucial part of an effective and regulated accounting system which will make your company more financially stable in the long run. With clear auditing and financial controls, you will be able to grow faster than your competitors that do not have these measures in their business. Your financial records provide potential investors and banking institutions the vital paper trail and data that shows that you are a professional business with effective processes and procedures.

Conclusion

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