Hypothetically, let's say you were buying chairs. Use that as an example to structure the parties, specifications, quantity, price, delivery and confirmation details in your PO. Keep a record you can cross-check against receiving and payment later.
“Send me the same as last time” for a repeat order. May be a different store. May be a different address. Or different quantity. Put the differences in the template. The supplier shouldn't have to remember or work it out. Check before they start work or send the goods, rather than explaining after a wrong delivery.
Separate your order, billing and receiving details
Label it Purchase Order. Give the PO its own number. Issue date. Buyer. Supplier. Names and contact details. The supplier details should match the confirmed supplier record. Include references such as purchase requisition, contract, project, department or budget where relevant.
The paying company's billing address may differ from the store delivery address. Separate fields. Add purchaser, approver, receiving contact. Required arrival date. Receiving windows. Site phone. Better to have fixed fields than squeeze text into a corner.
- Separate PO number and issue date.
- Buyer and confirmed supplier details.
- Billing address and delivery address.
- Purchaser, approver, project and department.
Goods specifications instead of shorthand
Name. Relevant supplier item number if any. Model. Specification. Quantity. Unit. Unit price. Tax. Amount. For a service: scope, milestone outputs or agreed hours. Refer to a specification attachment or statement of work if the details can't fit.
Number of units in a pack. Confirm whether the price includes tax. Is freight separate?
Subtotal, discounts, freight, taxes, authorized total, currency. State whether the amount is estimated or has a not-to-exceed limit. Don't leave the supplier guessing whether quantities or prices may change.
- Goods and service descriptions.
- Quantity, unit and agreed price.
- Freight, discounts, taxes and total.
- Currency and price restrictions.
Explain delivery and substitutions
What about delivery date or date range? Delivery location? Shipping method or applicable agreed trade terms? Whom to contact? How to unload? How to access the site? Include what's relevant to this purchase. For a service: when does it begin or end? Milestones? Agreed hours?
Allowable substitution for an unavailable brand? Partial delivery? Who can approve the changes? Determine these before delivery.
Make contract and payment terms easy to find
Make acceptance requirements, payment terms accepted by the supplier, required invoice information and the change process easy to find.
Reference any existing master contract and the order of precedence. The PO should not silently override agreed contract terms. Contract formation depends on acceptance, the original agreement and applicable rules.
- Delivery date, location and instructions.
- Acceptance or inspection requirements.
- Agreed payment terms.
- Contract and change references.
Record internal approval
Note the approver, role, date and basis under your process. Send to the supplier after approval. Save the version sent and the supplier confirmation. Don't copy an old number or approval to a new order. Copying a supplier quote might save typing, but the quantities, options and terms should match this authorized purchase.
- Identify approval authority.
- Individuals involved.
- Dates.
- Consistent numbering.
- Revision history.
- Correspondence between order, actual receiving record and invoice.
Supplier confirmation and revisions
Internal approval doesn't mean the supplier has agreed. Request confirmation of prices, quantities, availability and delivery dates. Make differences known. With a sent but unconfirmed order, don't decide the next step solely on the sent status. Contract formation depends on the agreement, acceptance process and applicable rules.
Use a revision mark and written description for changes to quantity, address, price or delivery date. Retain the original. Notify the supplier before delivery. Avoid conflicting arrangements in identically named attachments, chat and paper copies.
Use the PO to link records
The PO number doesn't replace the supplier's invoice number. Different people may receive, review and arrange payment; show what each needs to do.
| Area | What to check |
|---|---|
| Buyer and supplier | Who orders, who supplies, whom to contact for confirmation |
| Delivery | Location, timing and who receives |
| Items and amounts | What, how much and the pricing unit |
| Payment terms | When and which documents |
| Confirmation and changes | How to confirm and agree changes |
To allocate purchase costs, reference the client project or internal requisition. State the original plan. Record actual receiving and payment separately.
Try it on a purchase
Hypothetical office order. Ten chairs of a specified model at 120 each. Agreed delivery 80. Total before tax 1,280.
In addition to “chairs”:
- What style?
- Colour?
- Where?
- When delivered?
- Contact the manager before delivery.
- Is installation included?
Record each delivery for part deliveries. Check which delivery the supplier invoice covers. Is freight one-off or split as agreed? A total quantity on the template doesn't imply everything arrived.
| Hypothetical order | Quantity | Unit price | Amount |
|---|---|---|---|
| Specified office chair | 10 | 120 | 1,200 |
| Agreed delivery | 1 | 80 | 80 |
| Total before tax | — | — | 1,280 |
One box of ten and ten boxes aren't the same. Keep the units consistent across order, supplier confirmation and later invoice. If you order ten chairs but receive eight, consider actual receiving and the part-delivery agreement when reviewing payment.
Check received goods against the payment request
Date, quantity, condition, specifications. Document shortages or damage promptly and handle them as agreed. For services, record milestone acceptance or the service period. Don't force a service into goods quantities. Follow your process for site confirmation or an acceptance signature if needed.
When the supplier invoice arrives, check supplier and PO, goods receipt or service acceptance, quantity, price, taxes and total. Don't bury differences in a number. Record and resolve them. The order, receiving record and invoice support payment approval.
Keep open items visible after payment
Check credits and previous payments. Record this payment and the bank reference. Keep shortages, disputed charges and pending refunds listed. Paying one invoice doesn't mean the purchase is complete.
Save the order, revisions, supplier confirmation, receiving and payment records. Then you can find the initial plan, goods or services actually received, and final payment. The PO connects them; it isn't an additional supplier invoice entry.
Clear old details before reusing the template
Clear the old supplier, address, number, date and approval from the blank template. Check current prices, available quantities and delivery terms even for repeat purchases. Don't assume the last quote is valid forever.
Keep a yearly overview of sent, confirmed, partly received, fully received and closed orders. Keep cancellation reasons too, so an old PO isn't used to request delivery later.
For a small team, a spreadsheet can work. Manage numbering, approvals, formulas, access, revisions and final copies. For a more complete purchasing process, assess a dedicated system. A template or PDF generator doesn't automatically handle those steps.
Questions
Who places a purchase order?
The buyer specifies and authorizes the planned purchase. Where required, the supplier adds the PO reference to delivery documents and its invoice to link them.
Is a purchase order an invoice?
No. A PO describes the buyer's purchase requirements and terms. A supplier invoice sets out charges and requests payment. They can be linked but have different purposes.
Can I create a PO in a spreadsheet?
Yes. Manage numbering, approvals, formulas, access, versions and final copies. For a more complete purchasing process, assess a dedicated system.
Does silence mean the supplier accepts everything?
Don't rely on sending alone to mean everything is accepted. Get explicit confirmation of important quantities, prices and delivery dates. Contract effect depends on the parties' agreement, acceptance process and applicable rules.
Are PO and invoice numbers the same?
Usually the buyer and supplier manage them separately. The supplier invoice refers to the PO number for matching. Don't treat them as the same number.
Sources
- US Federal Acquisition Regulation: government purchase order definition.
- FAR 13.302-1: purchase order content. US federal procurement, not a general rule for private businesses everywhere.