Purchase Order Essentials + Free Template

December 6, 2021

Looking for a free online PO (purchase order) form? If you are looking for templates for purchase orders, you’ve come to the right place. On this page, you’ll find a purchase order form template that will make completing and submitting purchase orders fast and easy. 

If you’re not sure what a purchase order is, don’t worry. This article will describe the purpose of a purchase order, list its primary components, and provide a sample purchase order template to model your own POs. 

Also, at the end of this article, we’ll reveal a simple way to generate as many purchase orders you need, in a fraction of the time it would take to download, fill out, print, scan, and submit a purchase order from a template. 

First, though, let’s dive into the basics. 

What’s the purpose of a Purchase Order?

A purchase order is a commercial procurement document that is created by a business purchasing department when placing an order with its vendors and/or suppliers. The document specifies the details on the desired items (type of goods, quantity, and price).

What is a purchase order form?

Before you buy or download purchase order templates, let’s take a look at what these forms are, or skip to the end of this article to download a free purchase order template.

A Purchase Order (PO) form is a business document created by a buyer who wants to purchase goods or services from a seller. The document contains all of the purchase details, including the specific products or services, the number (quantity) of each item, the price for each item, the total price, delivery date, and payment terms.

As the buyer, you are responsible for creating and submitting purchase orders for purchases you make. This includes the basic information of the transaction, along with any conditions or special requests.

The seller has the right to review and accept or reject the PO. If the seller accepts, both parties sign the purchase order. This makes the PO a legally binding document.  If you want to dive deeper into purchase orders terms and conditions, visit our article that explains what are purchase orders terms and conditions.

Each purchase order should be assigned a unique PO number. This number will help you easily identify and track all aspects of the transaction, including order confirmation and payment. The PO number will also help your seller process and fulfill your order more efficiently. If you want to dive deeper into how does a purchase numbering system works, visit our article titled: “What is a PO number and how to use it". Try our free Purchase Order Template and streamline your Procurement Process!

Purchase orders are standard for both sellers and buyers as “official records” of their transactions. A signed purchase order is a contract between the buyer and seller. This means that if there is a problem on either end - yours or the seller’s - legal recourse could be available. 

Structure of a Purchase Order Form

Although there are some variances among purchase order forms, most of them are made up of the same basic components. Here are the elements that make up the basic structure of an order form:

  1. Header: This section is where you’ll list basic information about your company - its name, physical and mailing address, phone number, and website. The header should also display the date the purchase order was generated, and the purchase order number. 
  2. Vendor data: In this section, you’ll fill in the seller’s information. This includes the name of the vendor, the name of the representative you’re working with, and the seller’s address, phone number, and website.
  3. Billing and shipping addresses: List the full address where the completed order will be shipped once complete. If your billing address is different from your shipping address, be sure to list this information as well. 
  4. Order details: Include a line item for each product or service that is part of your order. Each line item should include the product SKU number or product identifier code, item name and description, unit price, quantity requested, and anticipated delivery date. 
  5. Pricing and cost information: At the end of the purchase order, you will list the subtotal cost for all items requested, discounts applied to the order, taxes, shipping and handling costs, and the total cost of the order.

Purchase Order sample

Here is an example template to help you model your own purchase order forms:

  • Click here to download a purchase order template in Excel
  • Click here to download a purchase order template in Word

Sales Orders vs. Purchase Orders: Key Distinctions for Business Success

Sales orders and purchase orders are fundamental documents in the world of business, each playing a distinct role in the supply chain. Sales orders represent the demand side of the equation, initiated by customers when they want to purchase goods or services from your company. These orders outline the specifics of what a customer needs and when they need it. On the other hand, purchase orders are generated by your company when you intend to buy goods or services from suppliers. They detail what you require, terms of the purchase, and when you need it.

Understanding the importance of these documents is crucial. Sales orders help your business manage customer demand, ensuring you fulfill orders accurately and on time. They also serve as a basis for revenue recognition, helping you track your sales performance. Meanwhile, purchase orders are vital for managing your supply chain efficiently. They allow you to control costs, negotiate favorable terms with suppliers, and maintain inventory levels that meet demand without overstocking.

What Are Purchase Order Terms and Conditions?

Purchase order terms and conditions are the contractual clauses and stipulations that govern the buyer-supplier relationship during a purchase transaction. They outline the rights, responsibilities, and expectations of both parties, establishing a clear framework for the purchase.

Key Components of Purchase Order Terms and Conditions:

Payment Terms: This section specifies how and when payments will be made, including details such as payment methods, due dates, and currency.

Delivery Terms: These terms outline how and when the goods or services will be delivered, including shipping methods, delivery dates, and any associated costs.

Product Specifications: Detailed descriptions of the products or services being purchased, including quantity, quality standards, and any applicable warranties.

Pricing: The agreed-upon prices for the products or services, including any discounts, taxes, or additional fees.

Cancellation and Returns: Guidelines for canceling or returning orders, along with any associated penalties or restocking fees.

Intellectual Property: If relevant, this section addresses the ownership and usage rights of intellectual property associated with the purchase.

Dispute Resolution: Procedures for resolving disputes between the buyer and the supplier, often through negotiation, mediation, or arbitration.

Confidentiality: Protection of sensitive information shared during the transaction, ensuring it remains confidential.

The Role of Procurement Software (AKA Purchasing Software):

Automation: Procurement software streamlines the process of generating purchase orders and ensures that the relevant terms and conditions are automatically included. This minimizes errors and saves time.

Compliance: Procurement software can help ensure your purchase orders comply with industry regulations and your organization's internal policies.

Visibility: By storing purchase order terms and conditions digitally, procurement software makes it easy to access and reference them when needed, promoting transparency.

Auditing: These systems record of all purchase orders and their associated terms and conditions, aiding in audits and compliance checks.

Benefits of Properly Managed Purchase Order Terms and Conditions:

Risk Mitigation: Defined terms and conditions reduce the risk of disputes and legal issues, protecting your organization from potential financial and reputational damage.

Cost Control: Properly negotiated terms can lead to cost savings through favorable pricing, discounts, and payment terms.

Supplier Relations: Well-structured terms and conditions foster positive relationships with suppliers, enhancing collaboration and reliability.

Efficiency: Procurement software ensures that terms and conditions are consistently applied across all purchase orders, reducing manual effort and ensuring accuracy.

Want to make generating purchase orders even faster and easier? 

You could find purchase order templates because many people prefer the traditional method of downloading and storing individual purchase orders. For those willing to embrace today’s technology, though, there’s a much simpler way: ControlHub’s free online PO generator. 

An online PO generator lets you skip the process of downloading and printing purchase order templates. Instead, you can simply enter the information into an interactive web form, and the software will automatically generate a professional-looking, simple to follow purchase order in seconds. 

Our free online purchase order generator lets you quickly and easily create professional purchase orders in just a few minutes - no need to download, copy, and organize templates!

This streamlined approach not only saves time but also enhances accuracy and efficiency in your procurement process. Plus, understanding the distinction between purchase requisition vs purchase order becomes more accessible with such modern tools at your disposal.

Keeping Purchase Orders & Inventory under control

As a hardware-intensive startup surely you are buying a lot of parts and components that are crucial for product testing and development. Both procurement and engineering teams know that if a critical part is missing, product development could be delayed indefinitely until the part arrives.

Operations & Engineering teams at companies that thrive, independent of their stage (small business, startup or a big corporate), pay a lot of attention to inventory management and you should too.

The Significance of Purchase Orders Template in Streamlining Procurement

Harnessing the efficiency of purchase orders templates is akin to setting a foundational pillar for your hardware startup's procurement processes. A well-structured template provides a standardized format and ensures consistency in capturing vital order details. With the dynamism that hardware startups usually display, any tool that fosters streamlined, repeatable, and error-free operations is invaluable. When embedded within an automated purchase order system, such templates become the bedrock for speed, accuracy, and scalability. While automation is the engine driving the procurement car, the purchase orders template is the blueprint, ensuring the vehicle is built to perfection.

In the fast-paced world of business, precision and efficiency are paramount. This is where a Purchase Order Template in word processing software plays a vital role for companies. This seemingly simple document is the linchpin of successful procurement, ensuring that orders are clear, organized, and compliant with company policies.

Through the use of a Purchase Order Template, companies can streamline their purchasing processes, reducing the risk of errors and misunderstandings. It serves as a standardized blueprint, guiding employees through the procurement process and facilitating communication between departments.

Furthermore, this template helps businesses maintain a comprehensive record of their purchases, promoting transparency and accountability. It becomes invaluable during audits, budget planning, and vendor negotiations.

The Power of Purchase Order Tracking

Purchase order tracking is a pivotal aspect of procurement, ensuring efficiency, transparency, and cost control. It entails monitoring the entire lifecycle of purchase orders, from creation to fulfillment and payment. The significance of purchase order tracking in procurement becomes evident through several vital benefits:

1. Visibility and Accountability: Tracking purchase orders grants real-time visibility into order statuses, fostering accountability among suppliers and buyers, thus mitigating the risk of errors and disputes.

2. Budget Control: This tool enables organizations to maintain budgetary control by monitoring spending against approved purchase orders, thus preventing overspending and facilitating well-informed financial decisions.

3. Supplier Performance Evaluation: Purchase order tracking aids in evaluating supplier performance, allowing organizations to identify reliable suppliers and address issues with underperforming ones, ultimately enhancing supplier relationships.

4. Efficient Workflow: By streamlining the procurement workflow, purchase order tracking ensures prompt order processing, reducing delays and minimizing disruptions caused by late or missing supplies.

5. Compliance and Audit Trail: Maintaining comprehensive purchase order records ensures compliance with regulatory requirements and provides an audit trail for both internal and external audits, ensuring transparency and accountability.

6. Forecasting and Planning: Historical purchase order data proves invaluable for future procurement planning, enabling organizations to make data-driven decisions, optimize inventory levels, and negotiate better terms with suppliers.

7. Reduced Errors: Tracking purchase orders helps detect discrepancies and errors early in the process, lowering the risk of incorrect shipments, billing discrepancies, or missing items.

Purchase order tracking is an indispensable tool for effective procurement management. It empowers organizations to optimize their procurement processes, exercise budgetary control, nurture supplier relationships, and ultimately contribute to overall business success.

Streamlining the Order to Cash Process: Enhancing Efficiency and Revenue Growth

The Order to Cash (O2C) process is a fundamental business workflow that plays a pivotal role in the success of any organization. It encompasses the entire journey of a customer's order, from the initial request to the final payment receipt. This process is of paramount importance as it directly impacts revenue generation and customer satisfaction.

The O2C process typically involves several key steps:

1. Order Creation: It starts with a customer placing an order, through various sales channels or directly with the company.

2. Order Processing: Once received, the order is validated, and inventory availability is checked. Any necessary approvals are obtained, and the order is prepared for fulfillment.

3. Fulfillment: This phase involves picking, packing, and shipping the products or services to the customer. Accurate and efficient fulfillment is critical to meeting customer expectations.

4. Invoicing: An invoice is generated based on the order, detailing the products or services provided, their quantities, and the agreed-upon prices. This is a crucial step in revenue recognition.

5. Payment Processing: After receiving the invoice, the customer makes payment using their chosen method, which may include credit cards, checks, or online payment systems.

6. Cash Application: The received payments are matched with the corresponding invoices and applied to the customer's account. This step ensures accurate financial record-keeping.

7. Collections: In delayed payments or disputes, organizations may need to engage in collections activities to secure outstanding funds.

8. Reporting and Analysis: Throughout the O2C process, data is collected and analyzed to monitor performance, identify bottlenecks, and make informed decisions for process improvement.

Efficiency and accuracy in the O2C process are vital for maintaining cash flow, reducing operational costs, and fostering positive customer relationships. Automation, integrated software solutions, and data-driven insights are increasingly utilized to streamline and optimize this process.

Frequently Asked Questions

What is a purchase order form and why is it important?

A purchase order form, or PO, is a document that a buyer creates to purchase goods or services from a seller. It includes details like what you're buying, quantity, price, delivery date, and payment terms. It's like the official shopping list for businesses, ensuring smooth transactions and clear communication between buyers and sellers. It's the foundation of successful purchases!

Why is it important to have a unique purchase order number?

Having a unique purchase order number is like having your own superhero identity for each transaction. It helps you keep track of purchases and makes the process smoother and faster. Plus, it adds a touch of organization and professionalism. Dive deeper into the world of PO numbers with our article "What is a PO number and how to use it" and become a purchase order pro!

What elements should be included in a purchase order form?

A purchase order form typically includes headers, vendor data, billing and shipping addresses, order details (item descriptions, quantities), and pricing and cost information. Each element has its place, like a well-organized party. It ensures everyone involved knows what's going on from start to finish!

How can I create purchase orders quickly and easily?

Say goodbye to time-consuming processes! Our solution will blow your mind. ControlHub's free online PO generator is a game-changer. No more downloading and printing templates. Simply enter the info into a web form, and boom! You get a professional-looking purchase order faster than you can say "add to cart." It saves you time, effort, and storage space. Our purchase order software has got you covered.

Why do I need purchase orders for my startup?

Purchase orders are essential, especially if you're running a hardware-intensive startup. They help you keep inventory and operations under control. With purchase orders, you can track what you've ordered, what's on its way, and what's still missing. It's like having a superhero sidekick that keeps your business running smoothly. Say goodbye to critical parts going missing and hello to organized and efficient procurement!

Purchase Order vs Invoice: Are they the same?

A purchase order is a commercialprocurement document that is created by a business’ purchasing department whenplacing an order with its vendors and/or suppliers. The document specifies thedetails on the desired items (type of goods, quantity, and price). An invoiceis a time-stamped commercial document that details and records a transactionbetween a buyer and a seller. If goods or services were purchased on credit,the invoice usually details the terms of the agreement and provides informationon the available payment methods.

What is an electronic purchase order?

An electronic purchase order is the same as a traditional purchase order, except that it isnot placed on paper. It is a digital document that outlines the line items inan order, the terms and conditions both the buyer and seller must adhere to,pricing, delivery, and other information you'd expect to find on a PO.

What’s order time?

Order time or purchasing lead time starts when the goods or services are ordered and ends when they arereceived. This lead time includes availability confirmation, ordering,order acknowledgement, shipping notice, receipt of goods or service, invoice recordingand payment.

What is a Purchase Order book?

Purchase Order Book shows a summaryof all purchase orders. You can view a list of all the purchase orders untilthe date of last order entered.

What’s a POsystem?

A purchase order (PO) system is an automated digital tool that creates numerous purchase agreements between your online store and manufacturers, distributors, or suppliers. This system simplifies how you order stock for your store, giving you simple concrete options for creating a purchase order to send to your supplier.

 If you are looking to step up your procurement game consider signing the services of Control Hub, this software will cover many of your needs, including acting as a PO system for small businesses.


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