How to Create a Purchase Order – 5 Steps to Follow

  • Features
  • Posted by: admin
  • Aug 8, 2014
  • Reading Time: 5 minutes

Every B2B purchase transaction begins with a Purchase Order. In general, Purchase Orders tend to be standard for a business organization across its various business transactions. Computerization and IT has made Purchase Order creation a simple task as there are a host of software that can generate different types of Purchase Orders and in formats including digital. However the choice of the format depends on the business requirements involved in the trade.


 

Typically a Purchase Order contains;

  • details about the buyer,
  • details about the provider,
  • unique sequential Purchase Order ID, and,
  • all details of the purchase transaction.

 

Designing a Purchase Order

The Purchase Order templates can be designed in a spreadsheet or word document or even by software applications like Invoicera.
 
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Nevertheless, all Purchase Orders will have the common basic layout.
 

  • Buyer information section
    1. Buyer name and logo/trademark
    2. Buyer address
    3. Buyer contact details
  • Purchase specific details section
    1. Title of the document
    2. Unique reference number
    3. The order date
  • A field for the provider’s details such as name, address and contact info must be included.
  • The Purchase Order should include the field that states the location where the order should be delivered at.
  • Space for mentioning the details of the purchase such as:
    1. Product ID or service number
    2. Brief product or service description
    3. Purchase quantity
    4. Unit price
    5. Total price
  • Columns and rows to mention allied costs such as taxes, shipping/handling charges, etc, adding upto the total price
  • A section in the Purchase Order should be earmarked for any comments or additional information pertaining to the order
  • Have space for signatures/company seal
  • Insert a box to lay down the terms and conditions governing the transaction

 

Pointers for Purchase Order design

In the absence of a contract or agreement, the Purchase Order takes the role of the next most important legal document that puts forth the terms and conditions of a business transaction. The provider and buyer act in accordance to what is mentioned and agreed in the Purchase Order. The expectation from the provider in terms of quantity, quality, delivery date and delivery location is clearly pronounced and there is no room for any intercommunication. Purchase Order keeps both the buyer and provider on the same page.

 

Businesses vary so does Purchase Orders. Hence the reason why ready-made Purchase Order templates do not work out well for majority of the business houses. Therefore businesses prefer high amount of customization to these ready-made templates or else opts to custom make Purchase Orders. Custom Purchase Orders need to cover a lot of aspects so as to allay any future complications between the provider and buyer. This calls for some checkpoints to be kept in mind when designing custom Purchase Orders from scratch.

 

  • The buyer in all possible way should be legibly represented in the Purchase Order. The buyer’s details including the name, address, communication address, logo, etc should be clear.

  • A dedicated field in the Purchase Order is a necessity wherein the delivery address is mentioned in full. There are cases of confusion if delivery address is same as the business address of the buyer. For convenience sake, the buyer might be supposing that the consignment be delivered to an address that is different from his main address. This point needs to be highlighted and noted in the Purchase Order.
  • In order to give a legal backing to the Purchase Order, the buyer can have the template that bears the business’ licence or other details that identifies itself to be a legal entity. This gives weightage to the buyer in the event of any conflicts.
  • Letting the providers know where to send the invoices is a good value-add as often times invoices are to be emailed. This information can be included in the Purchase Order. The hassle of sending invoices through post can be avoided.
  • Besides the terms and conditions, it is highly advisable that buyer clearly mentions the payment criteria. If the payments terms are agreed beforehand, mention it in black and white in the Purchase Order. This measure can avoid the provider from cavilling when it comes to payment.
  • Similar to the payment terms, the buyer can detail the terms of delivery. These terms are specific in nature especially in instances where the delivery items are to be handled and delivered based on certain protocols or standards.
  • In interest of his business, the buyer can categorically specify certain clauses that dictates the acceptance of the items and return of the same. Say for example, the buyer can put down circumstances that can lead to the return of the goods such as if the packet is tampered or badly packaged.

Purchase Order is a relevant document that means a lot to the relationship between a buyer and the provider. More than just an order it doubles as a legal weapon if things go awry.

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