5 Things You Should Know About Purchase Order.
While starting out your own new business venture can be really exciting, it can be nerve-twisting too at the same time. Unfamiliarity with new business trends can cause a barrier in understanding and communicate with clients or suppliers. Especially, when it’s related to the purchase of goods, you need to catch up fast with the inside business terms and trends. Therefore here are 5 things you should be aware about a purchase order.
How Is Purchase Order Different From An Invoice?
Purchase order and invoice are two mostly confusing commercial terms and they can often seen like synonyms. Both, purchase order and invoice are the commercial communication source for exchange of goods and services. But their time of occurrence and their issuer are different. Although they are quite similar, they have a few differences which must be understood clearly:
How Purchase Requisition Integrates Purchase order?
Managing the requests of your employees when they want to purchase something is essential. Creating purchase orders, particularly from the purchasing system of ERP will allow for efficient purchasing, control, and visibility of your company’s spending. Therefore it is viable to create a standardized purchase requisition format, which all employees must use before placing an order. This standardized format ensures that receiving purchase requisitions does not waste your time and ensures consistency in all the transactions. Conversion of PR to PO becomes easy and quick.
Why Are Purchase Orders Important to Your Business?
Many organizations unfortunately overlook PO because they consider paperwork to be a mess that slows things down, or simply because they already have a working relationship with suppliers. When businesses are on the starting phase they have a decent purchasing process. As time passes, the process changes as these organizations develop relationships with their suppliers. Once a company grows and the purchasing demand becomes more specific, urgent, or complex, communication challenges can arise if a purchase order isn’t used or certain details are not correct in the order.
If a purchaser receives their order and there is no purchase order to use as a reference, it can be a misery for both parties to determine where the request went wrong. At that point, it’s likely that both payment and an invoice were sent, which puts both parties in a significantly more complicated legal situation. When things go down and becomes legal disputes, a purchase order provides a legal stand as a document when specific instructions for the supplier were given and specific accounting and audit trail was mentioned, can be used as a point of reference.
How Can You Use It As A Marketing Tool?
PO can be used as a marketing tool in many ways:
Legal document– PO stands as legal support in the case of disputes for errors and issues in orders and pricing.
Quick order process– PO helps to boost the order process by providing efficient details for the requirements to the supplier.
Automates invoice from PO– PO helps to automate the formation of the invoice and eases the efforts of the supplier and the purchaser gets consistent format of an invoice.
How Can You Automate The Process Of Creating A Purchase Order?
A purchase order can be automated with the help of advance and systematic purchase order system. An ERP software can automate the process of creating a Purchase Order from PR. If the PR is made in a standardized format, the PO can be easily automated and the information can be mentioned quickly. The cloud software already has the information about your integrated supplier, therefore dealing with them becomes easy.
TranZact is the cloud-based ERP software where you need to enter the information once and after that, you don’t need to take more efforts and purchase order can be created easily and hassle-free.