What Do You Know About Purchasing Order?

The topics to be discussed are critical to your business success. With this posting, it is expected to give you a clear explanation for beginner about what is purchase order.

What do you know about purchase orders?

Purchase order is a document sent by the buyer to the supplier which contains the order request in the form of type of goods, the quantity of goods, and the price has been agreed. The more complete and detailed the document, the more effective the purchase order process will be. When the supplier receives the order, a contract will be established between the buyer and the supplier.

What is the difference between purchase order and invoice?

In short, buyers make a purchase order. Then the seller prepares the invoice after payment has been received. In some cases, the buyer is given an invoice with a payment due date.

In a purchase order and invoice has almost the same details. Basically, usually invoices always refer to the purchase order to ensure that both documents contain the same information. The difference lies in the technical details that exist in the purchase order but not in the invoices.

Why is a Purchase Order so important to a business?

Now try to imagine, what if the buyer receives their order, but the items received do not match the requested specifications? If the buyer does not have a purchase order that can be used as a reference, how do buyers and sellers determine where the error lies? That is why a purchase order is needed to avoid those kind of things.

Why is the manual procedure inefficient?

If your organization uses a paper in handling purchase orders or transactions or other activities, then you should be prepared to create a lot of documents. Just imagine, usually the company will make up to 7 documents in the manufacture of purchase orders. These include, requests, purchase orders, quotations, orders acknowledgments, advice notes, goods received notes, packing slips and invoices. And it's all just one purchase order, what if there is more than one purchase order? How many documents should you create?

That's why a lot of erp software like Acumatica Cloud ERP are entering purchase order into their system so it can simplify the process as well as recording various transactions done in business