Purchase order

A purchase order, often abbreviated to PO, is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services required.

Sellers are also protected by the use of purchase orders, in case of a buyer's refusal to pay for goods or services.

[4] Creating a purchase order is typically the first step of the purchase-to-pay process in an ERP system.

[5] Future business scenarios anticipate a reduced role for purchase orders or even their full elimination, leaving organizations with a smaller and more strategic procurement function than in the past.

Kai Nowosel and Kris Timmermans of consultants Accenture ask why purchase orders and invoices are needed when digital systems can deliver goods confirmations and authorize funds, and suggest that digital functionality and supply analytics will change the landscape for purchase orders and processes "in the coming years".

[9] Some organisations operate a "No PO, no pay" policy, which means that invoices which do not refer to a purchase order number will be returned to the supplier unpaid.

It is common for electronic purchase orders to be used to buy goods or services of any type online.

However, many computer (included web-based solution) systems are available on the market that can facilitate the capture of purchase request information.

Such a system is there to guarantee that goods and services are purchased with the consent of the line manager and that a sufficient budget is available.

[14][15] Many transactions are between a Client company that is selling to a large Buyer, and buying from a Supplier in Asia, South America, or Europe.