One of the most basic concepts in commercial business today is PO. However, not everyone knows what PO is? If you are feeling quite confused and confused about PO, please refer to the following content. We will detail the definition, position, role and how to use and manage this document effectively.

PO? Information businesses need to know about PO

Let's find out what PO is? enterprise
Let’s find out what PO is? Its role and meaning to the business


Finding this article means you want to know what PO is. Specifically, PO stands for “Purchase Order” or “Purchase Order” in English. They are documents sent by the buyer to the seller that represent the official binding of authorization authorizing the purchase of goods or services.

You will understand better “What is PO?” after following the following print pattern
You will understand better “What is PO?” after following the following print pattern

Each order is uniquely numbered for easy tracking and management. This document shows details of the transaction such as: Date made, Seller/buyer, Product Description, Specifications, Unit Price, Quantity, Total Value, Payment Terms, Delivery Conditions , Discount conditions, …
In addition, PO can also be understood as post office or an abbreviation for Paypal’s Payonee cash card. In today’s content, we will explain what PO is as well as its position and role with the abbreviation of an order.

Position, role of PO

After understanding what PO is?, do you recognize PO as an extremely important document for businesses? Indeed, PO is a document for checking and evaluating orders. PO provides all necessary information related to the purchase and sale to help ensure the legality as well as the interests of the buyer and seller. In the case of a sale without a formal contract, the PO is a legal document recognized by the seller.

PO clearly shows the needs and wants of the buyer to the supplier. The two parties can use this document as a reference in case the delivery and payment are not made according to the exchanged content. If the buyer refuses to pay, the seller is protected.

In addition, PO is also a document to help management, only spending when saving the request and cost statistics related to the order. Along with that, people also use PO in the audit process to ensure that the process of issuing, processing and recording orders is really authentic.

PO is different from Invoice?

Understand what is PO? It’s also about distinguishing it from Invoice. PO (Purchase Order) is often confused with Invoice (Invoice) because the same document is issued during the purchase and sale of goods. However, there is a big difference between them.

After understanding
After understanding “What is PO?”, can confirm this document different from invoice

About the time and purpose of formation, PO is created by the buyer when ordering, while Invoice is created by the seller to store the purchase/sale transaction. take place. Thus, a Purchase Order is created and passed on to the seller to initiate the purchase. Meanwhile, the Invoice is passed to the buyer when the purchase is made successfully. This document is automatically exported and managed by software.

In terms of content, the PO clearly states the required information similar to a sales contract. For invoices, the information is used to confirm the sales process and store it for the settlement.

Forming and using PO

Understanding the process of formation and flow of PO will help you better understand what PO is. Specifically, this voucher is exported and used according to the following steps.

Step 1: Find out and decide to buy

Through the information and documents provided, the buyer understands about products and services and makes purchasing decisions at a particular business or store.

Step 2: Export PO Order

The buyer issues and sends the purchase order to the seller to initiate the purchase.

After learning about products and services, both parties buy and sell export and receive the PO to perform the next steps
After learning about products and services, both buyers and sellers export and receive PO to perform next steps

Step 3: Confirm or cancel the order</h3 > When the order is received, the seller checks and confirms the order received. In the event that the received order cannot be met, the seller will also notify the cancellation of the above order.

Step 4: Prepare order

Based on received orders, the seller ships or schedules production to ensure products and services are as required.

Step 5: Transport

After fully preparing the order, the seller ships the products and services to the buyer. The transportation can be done by a unit specializing in providing transportation services.

Step 6: Invoicing

Invoice corresponding to the purchase order is subsequently generated by the seller. Note: The stored PO number must match the received order. This is the basic information that will be cross-checked when forwarding.

Step 7: Receive and pay

When the goods are delivered, the buyer checks and receives the ordered goods. Then, the payment is made according to the terms stated in the order previously approved by both parties.

How to manage PO effectively?

Grasp “What is PO?” is not enough. You need to know how to manage it. The reason is because, during the operation, the amount of PO that each business outputs as well as receives is extremely huge.

When lying down
When lying down “What is PO?”, you should also care about manage these documents effectively

If not managed, properly stored, errors, mistakes are very likely to occur. In order for that situation not to happen, companies and businesses should apply some measures such as:

Manage PO by vendor

Store information related to the suppliers that the business has ordered. Pay attention to the clarity of the records so that access, rationalization, and subsequent ordering becomes more accurate and easy.

Classify necessary products and services before ordering

Businesses need to determine which items need to be stocked or handled regularly. Along with that, it is also important to divide purchases into multiple categories. All of the above work helps the manager to understand the cost constraints from which to come up with a balance plan and give the most necessary orders.

Implement purchase approval system

To better control purchasing costs, businesses should also build and apply a reasonable purchase approval process. This process helps prevent unsatisfactory purchases, especially duplicate orders for a product.

Building quality assessment and test items

Each order needs to be evaluated and quality assured as required. It can be done by building a test item with information such as: Quantity, price, characteristics, shipping details and related taxes … Evaluate the quality of products and services through Items help minimize errors and damage to businesses in the purchasing process.

Storage, manage records, documents properly

Records and documents related to orders are used in the audit process. Therefore, they need to be managed properly to limit loss, confusion and most importantly, security.

Apply clear undoing

Cancellation of orders also needs to be made explicit. Enterprises need to give an official document with specific content and clear approval signature when canceling PO. These related documents are stored with the destroyed PO.

Use PO management software

You should also use specialized software to manage orders as well as purchase orders. This tool helps to store and retrieve information effectively and helps a lot in the management, evaluation of goods import, payment and planning of purchases in the next time.

It can be said that the appearance of PO in business is essential. If you are managing a business, you can’t help but be interested in this document. Hope this article can help you understand “What is PO?” as well as understand its position and role. From now on, take the time to review and evaluate your PO management effectively or not. If not, how should it be improved? Surely that will give your business a much more solid foundation for development.