The procurement of goods and services can be a complicated process. Several forms of problems can occur, which can lead to delays and shipment errors. Using a purchase order can help to ease the procurement process.
A purchase order (PO) is a document, which a supplier of goods and services receives from a buyer to initiate a purchase. It is a legal document used by the seller to generate an order and the agreement between the two parties. It also allows the buyer to specify the type and quantity of required items. Additionally, it allows the seller to carry out an inventory on the required items and decide if they can venture into the purchase agreement with the buyer. A functional purchase order allows both parties to maintain their financial books accurately.
Purchase Order Fields
For you to have a valid purchase order, it must have several critical fields filled with specific information. These fields are:
- Buyer Information
- Method of Shipment
- Requested Goods or Services
- Remarks or Comments
- Subtotal and Total Field
All types of purchase orders would usually have a buyer information field. This information includes the company’s name and address. Also, the buyer would often include the purchase order number, which aids the filing of documents.
Method of Shipment
Requested Goods or Services
Remarks or Comments
Subtotal and Total Field
This field allows for the calculation of subtotal and total while considering taxes, handling and shipping fees, and discounts.
How to Create a Purchase Order
Specialized and general software applications can be used to generate a purchase order. The type you use may depend on availability and preference.
A useful purchase order can be generated through the following steps.
- Creating a Header
- Input Buyer Information and Preferred Shipping Address
- Input Vendor Information
- Order Information
- Summary of Order
Creating a Header
Input Buyer Information and Preferred Shipping Address
The buyer’s information and the preferred shipping address is written. The buyer’s information is usually written just below the header. In some cases, you may want to include it within the header. It is also essential to include the preferred shipping address for the buyer.
Input Vendor Information
You would also want to write the vendor information in the purchase order. Such information includes company name, contact person’s name, address, and contact details. All these are usually written at the top of the document.
It may be preferable to input the order information in a tabular form within the main body of the purchase order document. Each item is written with its corresponding code, description, quality, unit price, and expected delivery date.
Summary of Order
The summary of the order includes subtotal, discounts, taxes, other expenses, and the total cost. These are calculated and written accordingly in the summary field.
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Here’s the list of main invoice fields:
- Company information
- A unique identifier, date, and invoice number
- List of items and services
- Terms of sales
- List of fees
- Total due amount
Useful resources about invoices:
- How to Create an Invoice
- Tips to Customize your Invoice Templates
- Differences Between Bill and Invoice
- How to Create Invoice With/Without Logo
- How to Create Invoice With/Without Discount
- How to Create Invoice With/Without Tags
- Bill-Only Requisitions
- Payment Requisitions
- Purchase Orders
- PR vs PO
- Tax Invoice
- Chargeback Invoice