Purchase Order
Purchase Order(PO) is one type of Commercial Document issued by a buyer to a seller. It Contains all the details like items, quality, quantity, price etc..
When a Seller(supplier or vendor) accepts a purchase order a contract is formed between Buyer and Supplier. Buyer refuses any payment, the seller is protected because purchase order acts like a bond between them.
Purchase Order Types:
1. Standard Purchase Order: It is created for single time purchasing when you know the item, price, delivery schedule & payment terms.
2. Planned Purchase Order: It is a long time agreement committing to buy the items. In this you are well known about the item, price, delivery date but not sure about the required delivery schedules. You must specify a tentative date and all details of goods.
3. Contract Purchase Order: The buyer will create a contract purchase agreement with supplier to agree on specific terms and conditions without indicating the goods and services. Buyer can later issue the details to the seller.
4. Blanket Purchase Order: The buyer not know the proper details like price, item, quality etc..
Benefits of PO:
- Communicate everything
- Save Paper & work
- No goof-ups
- Order, Receive & Track payments
Purchasing Order Life Cycle:
Purchase Order Life cycle is nothing but the end to end process of Procurement. It covers from determination of requirements to Paymnet to Vendor.
