What is Purchase Order?
- Purchase Order is a Business documents, sent
from buyer to a supplier with a request for an order.
- When a seller (supplier, vendor) accepts a PO, then a legal contract binding is formed between the buyer and seller.
Uses of Purchase Order:
- PO gives the legal clarity to the seller regarding the items.
- It is used as a reference when things go wrong.
- It is used to prevent the wrong delivery because we check the delivered goods against what we ordered.
PO contains the following information:
- Date
- Purchase Order Number
- Vendor Details
- Shipping Details
- Quantity
- Price Details
- Sign of authority etc.,
1. Standard Purchase Order(SPO):
- Used for One-time purchases for goods and services. when you know the item, estimated costs, payment terms and delivery schedule.
- Created when you have long-term agreement with the supplier.
- You must specify the details of goods and services, payment terms and the tentative delivery schedule.
- Created when the details of items and services, payment terms are known but not specific about the delivery schedule.
- Created when the terms and conditions of a purchase are known but specific goods and services are not.
- Later we raise the SPO by referring to the CPA.
Purchase Orders Summary:
