Sending a purchase order (PO) seems easy enough, but you would be surprised how often this seemingly simple task is not properly executed. To make life easier for yourself, and to avoid a misunderstanding with your supplier, issue a detailed, effective PO by following our purchase order format below and downloading our free PO template, which includes reminders and suggestions that make the process completely fool-proof!
Don't think you need to send your supplier a PO? Think again! POs are mutually beneficial, protecting you from receiving the wrong item quantity (or the wrong item altogether) or being charged a higher price, while also protecting the supplier from issues with rejected goods or non-payment.
Information to Include on a Purchase Order
Keep in mind that the date shown on your PO should be the date the PO is sent to your supplier. If you write the PO on October 1st but don’t send it till October 10th, the date on the PO should be October 10th.
Purchase Order Number
Keep PO numbering format simple. It’s much easier to keep track of PO# 456 than it is to keep track of PO# YB-98348-3. Simplify and all parties will be happier.This number will be printed on packaging, so make sure it is correct and properly recorded in your system as well as your supplier’s system.
- Business name
- Business address
- Business contact information
- Buyer's name
- Buyer's contact information
- Always include two forms of contact (email + phone number)
Your Supplier's Information
- Supplier name
- Supplier address
- Supplier contact information
Ship To Address
The ship to address does not always match your business address, so be clear. If the ship to address changes after the PO has been issued, send a revised PO and alert your CSR by phone or email (see more on PO revisions below). While sending an email noting a new ship to address is helpful, failing to send a revised PO with the updated address could cause confusion in the long run.
- Item Number or SKU
- Revision Level
- Ensures supplier is making your product to the latest revision level
- Include details like color and size
- The supplier may have their own item number that they cross-reference with your SKU. Including a description provides extra assurance that the supplier is making the correct item.
- Unit Price
- Sort out pricing discrepancies at the time a PO is issued rather than down the road when it becomes much more complicated
- Issue PO in supplier’s currency unless otherwise noted
- Always order per carton quantity
- Example: If carton quantity is 100 pcs and you need 350 pcs, order 400 pcs for even cartons. Shipping in uneven carton quantities or breaking cartons can cause an inventory nightmare!
- Order per minimum order quantity (MOQ)
- Example: If MOQ is 1,000 pcs but you only need 500 pcs, ask your supplier if an MOQ exception can be made. Oftentimes the unit price will increase for orders less than MOQ.
- If you’re unsure about carton quantity or MOQ for a specific item, ask your supplier before issuing the PO to avoid subsequent revisions!
- Always order per carton quantity
- Unit of Measure (UOM)
- Pieces, sets, meters, kilograms, pallets, etc.
- This detail is often overlooked but is very important
- Total Price
This is one of the most important details on the entire PO. Your due date should align with the lead time (LT) your supplier confirmed. If the quoted LT is 100 days and you issue a PO with a due date in 30 days, this could be a major issue. If your order is urgent, speak to your supplier before issuing the PO.
Payment TermsIt's a good idea to include payment terms on your PO so there is no confusion as to when payment is due. This is helpful for both you and the supplier.
Note if you have a preference to ship FCL (20'/40'/40'HQ), LCL or air freight.
Shipping terms (Incoterms) will identify which party is responsible for arranging and paying for freight, duty and customs and delivery fees.
Include a designated section for extra details or requests. When you send the PO to your customer service representative (CSR), mention that there are special instructions in this section rather than assuming they will notice.
Sending a Purchase Order
Review the PO before sending it to your supplier to verify that all relevant details are included and you didn't make any critical keystroke errors (10,000 pieces could be an issue when you meant to order only 1,000 pieces)! This may sound like a no-brainer, but make sure you are sending your PO to the correct person. If you only order from a particular vendor once a year, you could have a different CSR and be unaware of the personnel change.
If your system is linked with your supplier's system through electronic data interchange (EDI), sending POs is very easy. If your systems aren't linked, emailing the PO should be sufficient. If you insist on faxing a PO, don't assume it reached its destination successfully. Follow up with a phone call or email to confirm receipt.
Requesting an Order Confirmation
You should always, always, always request an order confirmation (OC) from your supplier. Order confirmations should include item information, promised delivery date, ship to address and total price of the goods. If you haven’t already, establish an OC protocol with your supplier (weekly order status report, customer portal showing order status, etc.) You and your supplier should have an agreement that OCs must be sent to you within X number of days from receipt of your PO.
Here is the catch: sometimes things happen. Technology fails us. We make human errors. We accidentally overlook an email. If you don’t receive an OC from your supplier by the agreed-upon deadline, don’t assume it is simply delayed. Contact your CSR to ensure the PO was received and processed.
Revising a PO
If anything on your PO changes – item, revision level, quantity, unit price, ship to address, shipping method – send your supplier a revised order immediately. Don't simply discuss changes via email or over the phone. Use a specific revision numbering protocol (such as notating revisions as A, B, C) to keep things clear. Also – and this is very important – don’t forget to include the PO revision date!