Important of Purchase Order

Purchase Order is the commercial documents prepared by the buyer and send to the supplier as the proof of making a purchase with exact price and quantity. It is included the detailed specification of the product that the buyer want. Both parties use this document as the reference during the business transaction, buyers expected to receive the same goods at the same price as mention in the purchase order. The seller expects to make a sale base on the buyer order.

Prevent Duplicate Order

The buyer will be able to keep track of all the purchases to different suppliers, it will prevent them from making the same order twice. The purchasing department usually receives requests from various departments regarding any purchasing. Then they will compare quotes from various suppliers and select the best one, and purchase order (PO) will be prepare and cross-reference with the purchase request.

With a proper control sheet, we will be able to control all requests and link them to the purchase order. So only one purchase order is made for each request, no duplicate.

Prevent Price Increase

The purchase department usually seeks quotes and negotiates with suppliers before come to the final price in the purchase order. After placing the order, the supplier must supply goods with the agreed price even the price in the market change.

Keep Track of Order and Upcoming stock

Inventory management is very important for the company as it helps to save cost and arrange for the production. So if we have clear schedule of upcoming deliver, it will be more easy to control the stock.

Document for Three Ways Matching

The purchase order is a very important document for accountants and auditors to conduct three ways matching. The accountants will prepare purchase orders with goods to receive note and invoice before making payment. We want to ensure that payment only make for the product we ordered and received.

Legal Documents

Purchase order plays an important role in case of conflict, it is a contract between buyer and seller to deliver goods at the agreed price and the buyer must pay within the due date. If any party misses their obligation, another party can use the purchase order as the evidence in the court.

Purchase Order Format

Please click the link below to download the purchase order in Excel format.

Purchase Order Format

Purchase Order Format