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Even with computer based financial system and procurement system in place, the old standby purchase order is a system of placing the order for most organizations. The PO is an agreement that commits the buyer and seller to conduct business.
Unfortunately, even with the technology, purchase orders are still received by snail mail to the suppliers. This is one area of the procurement process that can add time to the procurement cycle. Of course you can always fax Po to the supplier, which has cut down on the time, but the PO still needs to have certain information before the supplier can fulfill product.
Essentially, purchase order form, a contract that the dealer know that you have the money and approval to make the purchase. Even more important for the seller is that when they have a valid PO they know they are going to get paid for goods or services.
As a seller, there are 5 factors Purchase Order that must be in place to allow fulfillment to continue
- PO Number – the actual number that has been assigned to be set. This is important information to them as well as accounts payable person, to pay the bill after it has been received. Purchase Order Number is a link to the seller paid.
- Ship To Address – this determines the location where the items ordered to be moved
- Bill to Address – this determines the address of where to send the bill
- Item details – exact items the customer wants to buy
- price – the price of each item and the total amount of the purchase order
In short, the purchase is a binding contract with your supplier to purchase goods and services based on negotiated prices and terms. Without the purchase requisition, the supplier will probably not ship products for fear of not getting paid.
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