Purchase order
A purchase order (PO) is a buyer's formal document to a supplier listing the items, quantities, prices and delivery terms it wants to buy. Once the supplier accepts it, the PO becomes the agreed basis for the delivery, for checking goods at receiving, and for matching the supplier's invoice.
What a purchase order includes
A complete purchase order leaves the supplier nothing to guess.
- PO number, date, buyer and supplier details.
- Each item with your SKU and the supplier's own item code.
- Quantity and the unit it is ordered in, such as cases of 12.
- Agreed unit price, currency, and any discounts.
- Delivery address, requested delivery date and shipping terms.
- Payment terms and any attachments, such as specifications or artwork.
The purchase order lifecycle
A PO usually moves through a few states: draft, approved, sent to the supplier, partially received, received and closed.
For example, you raise a PO for 600 bottles of olive oil OIL-008, ordered as 50 cases of 12. A manager approves it because it is above the buyer's limit, and it is sent to the supplier. The supplier ships 30 cases this week and 20 next week. After the first delivery is received, the PO shows 360 received and 240 outstanding. After the second, it is fully received, the invoice is matched, and the PO is closed.
Purchase order vs ASN vs invoice
The PO is what you asked for. The advance shipping notice is what the supplier says it shipped. Receiving records what actually arrived. The invoice is what the supplier bills. Three-way matching compares the PO, the receipt and the invoice before payment, so you only pay for goods that were ordered, at the agreed price, and actually delivered.
Common purchase order mistakes
Most PO problems show up at receiving or at invoice time.
- Ordering in the wrong unit, so the supplier ships 600 cases instead of 600 bottles.
- Leaving supplier item codes off the PO, so the supplier has to guess which product you mean.
- Closing a PO with lines still outstanding, then losing track of the backorder.
- Changing quantities or prices by phone without updating the PO.
How NextStock handles purchase orders
NextStock purchase orders support approval, sending to the supplier, attachments and split deliveries. The supplier catalog holds supplier SKUs, pack sizes, costs, lead times and minimum order quantities, and replenishment suggestions can propose POs when stock runs low against the reorder point logic you set. POs can also be bulk imported. See purchasing and replenishment.
Part of the NextStock warehouse glossary. Browse the full glossary