• Nicoleta G

Purchase Order


Purchase Order

Table of contents:


What is a Purchase Order?

What is a Purchase Order Software?

When to use a Purchase Order?

How to implement a Purchase Order process?

Main benefits of Purchase Orders

Other benefits of Purchase Orders

How Prokuria can help and why is it different?



What is a Purchase Order?


A purchase order (PO) is a document that is used when buying goods and services. The purchase order specifies the type of purchase, items to be purchased, the cost, and delivery date. A purchase order can also specify terms and conditions such as payment terms or discounts.


When you use purchase orders in your procurement process, they help you manage inventory more efficiently by giving suppliers visibility into what you need on hand at all times.


Purchase orders are very useful for small businesses because they allow them to buy goods without having to worry about credit limits set by their financial institution. In addition, a purchase order can help a business get discounts from its suppliers.


Purchase orders should be used when buying goods and services in large quantities, for items that are not readily available, or when the purchase is time-sensitive. They can also be used to establish terms and conditions with a supplier.



What is a Purchase Order Software?


A purchase order software is a type of software that helps businesses create and manage purchase orders. The purchase order software can help businesses track the status of their purchase orders, as well as keep track of the items that have been ordered. The purchase order software can also help businesses receive tracking information on the items that have been ordered.


PO software solution also automates purchase order creation and management. Likewise, purchase order software can also help businesses purchase the right items in bulk, as well as maintain a history of purchase orders, among other benefits.



68 PO Software Features



When to use a Purchase Order?


Purchase orders should be used when purchase orders are required by the company. The purchase order needs to include all of the necessary information for a supplier or manufacturer to know exactly what they need to provide, how much it costs and how soon it is needed.


Purchase orders should be used in companies that have specific requirements for receiving materials. This means that purchase orders need to be used in companies that have specific purchase order templates, purchase order numbers, and other requirements.


Purchase orders should also be used when goods or services are being procured for the first time. This is because purchase orders help track the history of a good or service, as well as who supplied it and when it was delivered.


POs can also be implemented when there are no other options available for recording material transactions. For example, purchase orders can be used when goods are received from a supplier that is not registered with the company.


Purchase orders should also be used in cases where approvals are required before the purchase can be made. This helps to ensure that all purchases are approved by the correct individuals before any money is spent.


POs should also be used in cases where there are no other options available for recording material transactions. This is because purchase orders help track the history of a good or service, as well as who supplied it and when it was delivered.



How to implement a Purchase Order process?


The first step towards implementing this process is to analyze your current situation. The purpose of this initial phase is to accurately determine where you stand, how your current supplier base is performing, and what necessary steps need to be taken in order to improve efficiency, build stronger vendor relationships, and streamline processes.


The next viable phase is to decide on a pilot project that will be able to satisfy all of your goals established in the previous step. Lastly, you will have to choose a procurement manager and/or team capable of seeing the project to fruition.


Once this has been accomplished, the procurement team will implement the following steps:


  1. Create a purchase order - The purchase order will be provided to the supplier in question.

  2. Send out multiple requests for quotation (RFQs) - RFQs will be sent to several pre-determined suppliers that can meet the necessary criteria.

  3. Analyze and select a vendor - A purchase order will be issued to the vendor that is able to provide the best value and meet all of your needs.

  4. Negotiate contract and send PO - The purchase order will be finalized and sent to the supplier.

  5. Receive goods/services - The purchase order will be received, and the goods or services provided.

  6. Review purchase order - A review of purchase orders will take place to ensure that the process was executed in an effective and efficient manner.

  7. Authorize invoice and pay the vendor - The purchase order will be paid, and the supplier reimbursed for their services.

  8. Recordkeeping - All purchase orders will be logged, filed, and tracked in order to maintain an accurate history.

  9. Purchase order closure - Once the purchase order has been fulfilled and all associated documentation is in order, the purchase order will be closed.


Main benefits of Purchase Orders


There are several benefits that businesses can expect whenever they implement purchase orders within their procurement process. Among these, we can include the following:


1. Reduces purchase costs


Purchase orders enable procurement managers to buy products and services at lower costs than otherwise. This is thanks to purchasing order auctions that procurement managers can easily get into, putting them in a better position to negotiate prices.


Similarly, purchase orders enable buyers to avoid paying higher prices due to purchasing at the last minute. A purchase order will also allow purchase managers to buy larger quantities of products and services at lower prices.


2. Decreases purchase time


Purchase orders not only reduce costs but also the buying cycle time since buyers won't have to look for suppliers and make phone calls whenever they need something. All this is done automatically through an online platform that procurement managers can access at all times.


Likewise, purchase orders not only reduce purchase cycle time but also get items faster. Purchase times are also decreased by purchase orders since buyers can get their items in bulk.


3. Increases purchase efficiency


PO software is designed to provide purchase managers with a fast and easy way to purchase products or services, allowing them not only to track purchases but also to keep inventory levels up to date. This enriches procurement managers with the necessary information to make better buying decisions.


Similarly, purchase orders enable businesses to easily keep track of purchase history and quickly identify potential suppliers, among other things.


Purchase efficiency is also improved when purchase order software is used in combination with purchase order templates. This is because purchase order templates allow procurement managers to save purchase orders they have used in the past, which can then be reused or modified for future use.



Other benefits of Purchase Orders


Additional purchase order benefits include:


1. Improves supplier relationships - through the use of purchase orders, businesses are able to build better supplier relationships since purchase orders provide a formal way of doing business. Additionally, purchase order software can be used to create reports that suppliers can use to improve their own performance.


2. Prevents duplicate purchase orders - one other important benefit of purchase order software is that it helps buyers avoid duplicate purchase orders, which can often lead to confusion, as well as wasted time and money.


3. Reduces paperwork and errors - by using purchase order software, businesses are able to reduce or even eliminate the need for paperwork altogether. This not only makes the purchasing process faster and easier but also helps businesses stay organized and efficient. Purchase order software can also help businesses reduce purchase errors, which often lead to incorrect orders and/or payments.


4. The buyer has more time to evaluate products and services - by issuing a purchase order, buyers are able to purchase products and services without having to purchase them immediately. This is because a purchase order will only be issued once the buyer has fully evaluated all available options, which can help buyers purchase what they need at a later time but avoid paying extra for something that might not have been necessary in the first place.


5. Enhances purchase visibility - purchase order software allows purchase managers to see all purchase-related information in one place, making it easy to track and monitor purchase activity. This increased purchase visibility can help businesses make better buying decisions and improve their overall procurement process.


6. Improves cash flow - purchase orders automate invoicing processes, thus improving cash flow by reducing the time it takes for businesses to get paid.



How Prokuria can help and why is it different?


Prokuria's cloud-based purchase order software eliminates the need for any manual work, minimizing the risk of human error, in the process. It also coordinates the purchasing process and streamlines collaboration with suppliers in a modern and interactive way.


With Prokuria's PO platform, businesses will be able to:

  • Configure their POs from data fields all the way to the approval process. 

  • Gain access to interactive POs and a modern way of collaborating with suppliers. 

  • Track orders in real-time, as well as have access to clear status reports and smart notifications. 


Around 90% of Prokuria users accelerate communication and collaboration with suppliers in the first 3 months. 


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