What is Purchase Order?
A Purchase Order or PO is a document that contains the list of items to be purchased. It is sent by the buyer to the seller. Apart from the list of items, it also contains the quantities, negotiated price, and delivery dates. A PO is not a legal document.
Purchase Order Format
Every business has a unique purchase order format. However, there are certain details every purchase order must include. They are:
- PO Number – A unique ID number that helps in PO tracking
- PO Date – The date of issue of PO
- Seller Details – The name, address, and contact details of the seller
- Buyer Details – The name, address, and contact details of the buyer
- GSTIN – The GSTIN of the buyer’s company
- Shipping Details – The address and contact details of where the items need to be sent
- Billing Details – The details of where the bills need to be sent
- Shipping Methods – The preferred method of delivery: roadways, railways, by air, or by sea
- Delivery Date – The expected date of delivery of the listed items
- Order Details – The details of the items such as brand name, item name, SKU number, model number, quantity, price per unit, and the total amount
- Delivery Charges – The shipping charges to be charged for the delivery
- Taxes – The taxes charged on the items such as GST, toll taxes, and so on
- Total Order Value – The total amount of the purchase order, including the total amount of the items, shipping charges, and taxes
- Payment Details – The details for payment as well as the credit period, discounts applicable, and other details
Where is Purchase Order Format Used?
There are four types of purchase order formats, and each of them is used for different purposes.
Standard Purchase Order Format
This purchase order is generated for one-time purchases. The buyer is clear about the items and their quantity, price, payment, and delivery dates. For example, a fabric seller can send a standard PO for 50 bales of striped cotton cloth for the store. Each bale costs INR 1,000. The textile company has to supply the items within the next 15 days.
Planned Purchase Order Format
These are long-term orders for goods and services you need regularly. A planned PO does not have a scheduled delivery date. Other details like the quantity of the items and the price, etc., are correctly mentioned. For example, a builder orders 500 bags of cement from a supplier for a building construction without mentioning the delivery date.
Blanket Purchase Order Format
A blanket purchase order is an order that is generated for bulk purchases. Often, the buyer can avail of discounts. However, the purchase order does not mention the original and discounted prices of the product as well as the date of delivery. For example, a construction company can issue a PO for the bulk purchase of steel rods at a discounted rate.
Contract Purchase Order Format
In this purchase order, both the buyer and the supplier agree to certain terms and then sign the . It is a form of a legal contract, and both parties have to fulfil the terms. For example, a textile company and a fabric store sign a contract purchase order to supply and source fabric. You can use Microsoft Word or Excel to generate purchase orders easily. A purchase order is different from an invoice, and it is not a legal document. It is used to simplify business operations.
