How to Fill Out a Purchase Order

Use this step-by-step process to avoid missing fields and speed up approvals.

Required fields checklist

• Buyer details: company name, address, contact, email/phone.

• Vendor details: legal name, address, remit-to, contact, tax ID if required.

• PO number and date; buyer reference/requester; cost center/GL code.

• Ship-to and bill-to addresses; delivery instructions.

• Item lines: SKU/description, UOM, quantity, unit price, line total.

• Taxes, discounts, shipping, and other charges.

• Payment terms, delivery terms, and return/warranty notes.

• Approval signature or digital approval log.

Line items, units, and pricing

• Use precise unit of measure (each, case, kg, hour).

• Include SKU or internal item code to support receiving and 3-way match.

• Add clear descriptions with spec numbers or links to drawings/SOW.

Taxes, discounts, shipping, and totals

• Show tax basis (before/after discount) and applicable tax rate(s).

• List early-payment or volume discounts per line or subtotal.

• Separate freight and handling; indicate who pays per delivery terms.

• Display subtotal, tax, other charges, and grand total.

Terms and conditions essentials

• Payment terms (e.g., Net 30), late fees, and currency.

• Delivery terms (Incoterms), risk of loss, and title transfer.

• Warranty, returns, and acceptance criteria.

• Confidentiality, IP ownership (for services), and governing law.

Attachments and vendor confirmations

• Attach quotes, SOW, drawings, or license schedules.

• Ask for written vendor acknowledgment with ship/date confirmation.

• For services, require proof of insurance and compliance docs.

Example filled-out PO

• PO number: PO-2026-1048; Date: 2026-02-03; Buyer: Acme Co.

• Vendor: SupplyWorks Ltd., 123 Market St., remit: PO Box 55.

• Ship-to: Acme Warehouse, 200 Dock Rd.; Bill-to: HQ Finance.

• Items:

  • 24 x SKU-PAK100, Packaging Boxes, UOM: case, $18.50, Line total $444.00

  • 1 x FRT-GND, Ground Shipping, UOM: job, $35.00, Line total $35.00

• Subtotal $479.00; Discount $0.00; Tax (8.25%) $39.51; Shipping $0.00; Total $518.51

• Terms: Net 30, FOB Origin, Incoterms FCA Dallas; Delivery by 2026-02-10.

Purchase Order Types Explained

Standard vs Blanket vs Planned vs Contract POs

• Standard: one-time buy with fixed quantities/dates.

• Blanket: negotiated pricing/terms with a not-to-exceed cap; releases as needed.

• Planned: predefined items and tentative schedules; releases confirm dates/qty.

• Contract: references a master agreement; PO simply authorizes spend against it.

Service vs Goods POs

• Goods POs focus on SKUs, quantities, and delivery.

• Service POs center on scope, milestones, and acceptance criteria.

Change orders and revisions

• Use a change order to add lines, adjust price/qty, or extend dates.

• Maintain revision numbers and a brief change rationale on the PO.

Partial deliveries and backorders

• Note partial shipment policy and allow backorders only with approval.

• Track remaining quantities and adjust delivery dates per vendor confirmation.

Release schedules for blanket POs

• Maintain a release log with release number, date, items, qty, and received status.

• Reference the blanket PO number on each release.

When not to use a PO

• Petty cash or low-value spot buys below a threshold.

• Subscription renewals covered by an existing contract and auto-pay controls.

• Marketplace purchases where the platform issues order documentation.

PO Process and Controls

Requisition to approval to issuance

• Requester submits a purchase requisition with quotes/specs.

• Manager and budget owner review for need and budget fit.

• Buyer issues the PO to the vendor and obtains acknowledgment.

PO numbering system and prefixes

• Use a consistent format: PREFIX-YYYY-#### (e.g., IT-2026-0045).

• Optional components: department, location, or entity code.

• Reserve ranges for blanket POs and service POs to ease reporting.

2-way vs 3-way match

• 2-way: PO vs invoice match on price/qty for low-risk buys.

• 3-way: PO vs receipt vs invoice for inventory and higher-risk buys.

• Set tolerances for price/qty variances to reduce manual holds.

Budget/GL coding and categories

• Require cost center, GL account, and project/grant codes.

• For inventory, map to item/sku and inventory location.

• Validate codes via dropdowns to prevent posting errors.

Receiving and closeout

• Record receipts by item/qty/date and note discrepancies.

• For services, log milestone completion/acceptance.

• Close POs when fully received/invoiced or after expiry.

Audit trail and document retention

• Keep PO, requisition, approvals, quotes, receipts, invoices, and change logs.

• Retain for the required fiscal and tax period per jurisdiction.

• Use version control with timestamps and approver identity.

Customize in Excel or Google Sheets

Auto-calculation formulas

• Line total: quantity x unit price.

• Subtotal: sum of line totals; tax: subtotal x tax rate(s).

• Grand total: subtotal - discounts + tax + shipping.

Data validation and dropdowns

• Vendor, ship-to, GL, cost center, payment terms as dropdown lists.

• Use conditional formatting to flag missing mandatory fields.

• Lock formula cells; unlock inputs; password-protect structure.

Multi-currency and exchange rates

• Input currency code and rate; calculate reporting currency totals.

• Display both vendor currency and home currency.

• Timestamp the exchange rate source and date.

VAT/GST handling by region

• Support multiple tax rates (standard/reduced/zero).

• Capture buyer/seller VAT/GST IDs where required.

• Distinguish tax-exempt items and reverse charge scenarios.

Print areas and branding

• Set print area for one-page POs; include logo and company details.

• Add PO footer with standard terms and contact info.

Shared editing and permissions

• Limit edit rights to requester and buyer; view-only for others.

• Maintain an approval column/status with reviewer names and dates.

Legal and Compliance Considerations

Incoterms and delivery terms

• Specify Incoterms (e.g., EXW, FCA, DDP) and place.

• Clarify who handles freight, insurance, and customs.

Payment terms and penalties

• Define Net terms, early-pay discounts (e.g., 2/10 Net 30), and late fees.

• Include invoice submission instructions and required references.

Warranty and returns clauses

• Spell out warranty period, remedy, and RMA procedures.

• For services, define re-performance timelines and acceptance testing.

Insurance and risk allocation

• For on-site work, require COI with limits and additional insured language.

• Address risk of loss and title transfer timing.

Vendor tax forms (W-9/W-8)

• Collect W-9 (US persons) or W-8 series (foreign) before payment.

• Store tax documentation with vendor master records.

E-signature and digital records

• Accept digital approvals with auditable timestamps.

• Store signed PDFs and revision logs in a controlled repository.

Numbering and Templates Toolkit

PO number generator

• Use a prefix by department/entity and a zero-padded sequence.

• Avoid reuse; mark canceled numbers as void to keep continuity.

• Document the pattern so Finance and Audit can reconcile easily.

Change order template

• Include original PO number, change number, date, and reason.

• Show before/after values for lines and totals.

• Require the same approvals as the base PO for material changes.

Blanket release log

• Track release number, date, items, qty, unit price, and remaining cap.

• Include received and invoiced status to prevent over-commit.

Receiving checklist

• Verify item, qty, condition, and packing slip vs PO.

• Note damages/shortages and notify vendor within the stated window.

• Capture receiver name, date, and location.

Vendor master data fields

• Legal name, DBA, addresses, contacts, bank/remittance info.

• Tax classification/IDs, preferred currency, Incoterms, payment terms.

• Approved items/pricing and compliance documents.

Policy snippet for PO thresholds

• Define when a PO is required (e.g., >$500) and exceptions.

• Outline competitive quote rules and approval levels.

• Separate thresholds for capital, inventory, and services.

For broader planning beyond templates—like setting reorder points and safety stock—consider structured calculators and checklists such as inventory planning tools to keep purchasing aligned with demand.

Integrations and Exports

QuickBooks/Xero import formats

• Export POs as CSV/XLSX with columns for vendor, date, number, item, qty, price, tax, and memo.

• Map tax codes to match your accounting system.

ERP-ready CSV/XLSX structure

• Use unique IDs for vendor, item, location, currency, and tax.

• Include GL and cost center columns for direct posting.

Google Sheets add-ons

• Use add-ons to push POs to email or a PDF generator.

• Connect to approval workflows and document storage.

Importing vendor catalog CSV

• Preload item lists with SKU, description, UOM, lead time, and contracted price.

• Validate prices on PO creation against catalog or contracts.

Mapping GL codes

• Maintain a lookup sheet: item/service category to GL.

• Auto-fill GL based on item category to reduce coding errors.

Version control and change log

• Add a revision field and automated timestamp on changes.

• Keep a hidden sheet with editor, time, and change notes.

If you run ecommerce operations, align purchasing with demand signals and lead times. For storefronts on Shopify, connect forecasts to buying plans using a Shopify inventory forecasting app to reduce stockouts and overbuys.

WooCommerce stores can apply the same approach with a WooCommerce inventory forecasting plugin to inform PO quantities and timing.

Related Templates and Resources

Purchase requisition

• Internal request form that precedes a PO, capturing need, budget, and quotes.

Quote/proforma invoice

• Vendor quote or proforma supports pricing and terms; attach to the PO.

Goods receipt note

• Proof of receipt used for 3-way match; captures date, qty, condition.

Invoice and bill of lading

• Invoice references the PO for payment; BOL documents shipment details.

Vendor onboarding checklist

• Standardize vendor setup, compliance, and banking verification.

Spend policy template

• Define thresholds, approvals, and competitive bidding requirements.

A simple next step: pick one template type, standardize your required fields, and pilot a lightweight approval in your team. Iterate once you’ve completed a full cycle from requisition to receiving, then roll it out to all spend categories.

FAQs

What is a purchase order and why use one?

A purchase order is a buyer-issued document authorizing a purchase from a vendor. It locks in items, prices, terms, and delivery details, enabling budget control, clear approvals, and 2-way/3-way matching for accurate receiving and invoicing.

What’s the difference between a purchase order, invoice, and purchase requisition?

A requisition is an internal request to buy. A purchase order is the buyer’s formal offer with terms. An invoice is the vendor’s request for payment, typically referencing the PO after delivery or service.

Are purchase orders legally binding?

A PO can be legally binding when accepted by the vendor and supported by terms and conditions. Many organizations incorporate standard terms by reference or attach clauses for clarity and enforceability.

How do I create a purchase order number sequence?

Use a consistent format, such as DEPT-YYYY-####. Reserve ranges for special PO types, avoid reuse, and document the pattern. Prefixes (e.g., IT, MKT, CAPEX) help reporting and audits.

When should I use a blanket PO instead of a standard PO?

Use a blanket PO for recurring purchases from the same vendor where you’ve negotiated pricing/terms. It reduces admin by issuing releases against an overall cap rather than creating a new PO each time.

How do I handle partial shipments and backorders on a PO?

Allow partials only if acceptable, log received quantities by line, and keep a backorder list with expected dates. Communicate changes via change order or updated confirmation from the vendor.

Do I need a different template for services vs goods?

Yes. Service POs should include scope, milestones, deliverables, and acceptance criteria. Goods POs emphasize SKUs, quantities, and delivery specifics.

How do I add VAT/GST or multi-currency to a PO template?

Include fields for currency code, exchange rate, and dual totals (vendor and home currency). Add tax code columns and rates per line or subtotal, and capture VAT/GST IDs where required. For more guidance, browse our inventory management blog.