What is Purchase Order Processing?

 A purchase order is a document issued by the buyer of a product. It serves as legally binding documentation of an order and confirms that the buyer has authorized the purchase. It also demonstrates the intention of the Buyer to purchase the product or service. Purchase orders are often required by law, and can be used to track the inventory of products and services. The process of transferring a PO from the buyer to a supplier is known as PO processing.



The process begins with recording the basic details of a purchase order and creating a requisition for internal approval. This requisition is reviewed by a team of officials including the requisitioner, sign-off authority, procurement officers, and finance professionals. If the request is accepted, it is sent to the vendor. Once the vendor has accepted the order, he or she will confirm the delivery date. The receiving department will receive final details and will make payment to the vendor within the agreed terms.

In addition to a purchase order, a PO can include optional items, and it can be customized to meet a company's specific needs. In addition, e-procurement software enables the user to add account codes to the requisition stage, making reconciliation easier and faster. Most companies have a standard PO document, including stock information, invoice details, and a payment schedule. However, if a company needs to add extra items or change its delivery date, the PO can be canceled and the buyer will be informed.

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