Purchase order is a proper term for accounting and the day-to-day management of business activity. A purchase order is a written request to a supplier with the intention of purchasing certain items and at a price already agreed between the buyer and the seller.
What information does it include?
The purchase request indicates the terms of payment and delivery, so it is an authorization to the supplier to deliver the items and for the supplier to present a corresponding invoice. It must be borne in mind that all items purchased by a company must be accompanied by purchase orders, which are numbered serially in order to provide control over their use.
Purchase orders are normally issued in original and copy, the original being sent to the supplier and the copies are destined to the accounting department to be recorded in the account payable (there may also be a third copy for the company's purchasing department ).
The following sections are included in a purchase order:
- The purchase order number.
- The name and address of the provider.
- The date the order was placed and the required delivery date.
- The terms of delivery and payment.
- The quantity of items ordered and their description with their code number.
- Regarding the price, the price of each unit and the total purchase price are indicated, as well as the shipping cost, if applicable.
- Finally, the purchase order must specify the authorized signature of the responsible person.
The purpose of the purchase order
The above detailed information is intended to keep a precise control on the items purchased, since in this way a company can keep an accounting record of its purchase operations.
On the other hand, we must not forget that when a client issues a purchase order, he is confirming and formalizing the trust he has in a supplier.
The purchase order issued by the customer is one more step in the sales process, since the sale has not yet been definitively produced. In this sense, the purchase order implies that the company's procedures must be well defined and organized. Before issuing a purchase order, the customer has to know exactly what the process is to register it in his company and the seller must also make sure of the information in the document.
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