Free Printable Purchase Order Template

When managing business transactions, accuracy, and efficiency are paramount. This is especially true in the procurement process, where errors can lead to unnecessary costs and delays. One essential tool that helps organizations streamline their purchasing activities is the purchase order (PO).

A purchase order serves as a written record of a buyer’s intent to purchase goods or services from a supplier. It ensures that the goods ordered match the ones that are received and that the buyer is charged the correct amount for the goods.

What Are Purchase Orders Used For?

Purchase orders are an integral part of the procurement process for businesses of all sizes. They serve several important purposes:

• Formalizing the Purchase: It formalizes the agreement between the buyer and the supplier. It acts as a legal document that outlines the terms and conditions of the purchase.
• Communicating Requirements: It includes detailed information about the goods or services being ordered, such as quantity, description, and price. This ensures that both parties are on the same page regarding the specifics of the purchase.
• Tracking Order Progress: It provides a reference number that allows both the buyer and the supplier to track the progress of the order. This helps to ensure timely delivery and allows for easy follow-up on any issues that may arise.
• Controlling Costs: Specifying the agreed-upon price for the goods or services, helps prevent overcharging or billing discrepancies. They also help the buyer in budgeting and managing expenses.

Purchase Order Process

The purchase order process involves several steps that help ensure accurate and efficient procurement. Here is a breakdown of the process:

1. Identify the Need: The buyer or requisitioner identifies the need for certain goods or services.
2. Create a Purchase Request: The buyer creates a purchase request, including all necessary details, such as item descriptions, quantities, and delivery requirements.
3. Obtain Approvals: The purchase request goes through an approval process, where designated individuals review and approve the request based on predefined criteria.
4. Generate the Purchase Order: Once the purchase request is approved, a purchase order is generated with all the relevant information.
5. Send the Purchase Order: The purchase order is sent to the supplier, either electronically or by mail.
6. Receive the Goods or Services: The supplier delivers the goods or services as specified in the purchase order.
7. Verify the Goods or Services: The buyer inspects and verifies the quality and quantity of the received goods or services. Any discrepancies are documented.
8. Match the Invoice: The buyer compares the supplier’s invoice with the purchase order to ensure accurate billing.
9. Resolve Discrepancies: If there are any discrepancies between the purchase order and the invoice, the buyer and supplier work together to resolve them.
10. Process Payment: Once the invoice is verified and discrepancies are resolved, the buyer initiates the payment process based on the agreed-upon terms.

What Is On A Purchase Order?

A purchase order contains several key pieces of information that are essential for accurate order fulfillment and billing. Here are they are:

• Buyer Information: The name, address, and contact details of the buyer or purchasing organization.
• Supplier Information: The name, address, and contact details of the supplier or vendor.
• PO Number: A unique identifier assigned to the purchase order for tracking purposes.
• Order Date: The date when the purchase order is created.
• Delivery Date: The requested or agreed-upon date for the delivery of the goods or services.
• Item Descriptions: A detailed description of the goods or services being ordered, including specifications, quantities, and any other relevant details.
• Pricing: The agreed-upon prices for each item, along with any applicable discounts or taxes.
• Terms and Conditions: Any specific terms and conditions agreed upon between the buyer and the supplier, such as payment terms, warranties, or return policies.
• Shipping Information: Details regarding the shipping method, carrier, and any special instructions or requirements for delivery.
• Approvals: Signatures or electronic approvals from designated individuals who have reviewed and authorized the purchase order.

When Is A Purchase Order Required?

A purchase order is typically required for larger or more complex purchases. However, organizations may have different policies and thresholds for when a purchase order is necessary. Some common scenarios where a purchase order is required include:

• High-Value Purchases: For purchases above a certain monetary threshold, organizations may require a purchase order to ensure proper authorization and control over expenses.
• Recurring Purchases: If an organization has an ongoing agreement or contract with a supplier for recurring purchases, a purchase order may be required for each order to ensure consistency and accuracy.
• Custom Orders: For orders that require customization or special specifications, a purchase order helps ensure that the buyer’s requirements are communicated to the supplier.
• Legal or Regulatory Compliance: In certain industries or jurisdictions, there may be legal or regulatory requirements that mandate the use of purchase orders for specific types of purchases.

Who Receives Purchase Orders?

Several parties are involved in the purchase order process, each with their roles and responsibilities:

• Buyer: The buyer is the individual or department within the organization responsible for initiating and managing the purchase order process. They create the purchase request, obtain approvals, generate the purchase order, and handle the receipt and verification of the goods or services.
• Supplier: The supplier is the vendor or company that will fulfill the order and provide the requested goods or services. They receive the purchase order, prepare and deliver the goods, and submit an invoice for payment.
• Approvers: Approvers are individuals within the organization who review and approve the purchase request before a purchase order is generated. They ensure that the purchase aligns with budgetary and procurement policies.
• Accounts Payable: The accounts payable department is responsible for processing invoices and making payments to suppliers based on the purchase order and invoice matching process.
• Receiving Department: The receiving department is responsible for receiving and inspecting the goods or services when they arrive. They verify the order against the purchase order and document any discrepancies.

What Comes After The Purchase Order?

Once the purchase order has been sent to the supplier and the goods or services have been received, several steps follow:

1. Goods Receipt:

The buyer’s receiving department inspects and verifies the received goods or services. They check the quantity, quality, and condition of the items and compare them to the details specified in the purchase order. Any discrepancies or issues are documented and communicated to the supplier for resolution.

2. Invoice Matching:

The buyer’s accounts payable department matches the supplier’s invoice with the purchase order and the goods receipt. They ensure that the prices, quantities, and items listed on the invoice align with the purchase order and that any discrepancies or discrepancies are resolved before payment is made.

3. Payment Processing:

Once the invoice has been verified and any discrepancies have been resolved, the buyer initiates the payment process based on the agreed-upon payment terms. This may involve issuing a check, initiating an electronic transfer, or using a company credit card to settle the payment.

4. Record Keeping:

All relevant documents, including the purchase order, goods receipt, and supplier invoice, are stored for future reference and auditing purposes. These records help in tracking expenses, resolving disputes, and ensuring compliance with internal and external regulations.

5. Supplier Relationship Management:

After the purchase order process, maintaining a good relationship with suppliers is crucial. Regular communication, feedback, and evaluation can help foster stronger partnerships, ensure future orders are handled smoothly, and negotiate better terms and conditions.

Free Purchase Order Template!

A purchase order is an essential tool for businesses to streamline their procurement process and ensure accurate billing and order fulfillment.

Use our purchase order template in Word to efficiently manage and document your procurement process.

Ideal for businesses and procurement teams, this customizable template helps you detail product or service orders, quantities, and terms, ensuring clarity and accuracy in your transactions.

Streamline your ordering process, improve record-keeping, and enhance communication with this user-friendly, free template. Get started today!

Purchase Order Template – Word