Procurement - Purchase Orders

A purchase order (PO) is a formal document a buyer sends to a supplier to request goods or services under agreed terms.

Key points:

• Purpose – Serves as a legally binding agreement once accepted by the supplier, outlining exactly what the buyer intends to purchase.

• Details Included – Item descriptions, quantities, prices, delivery dates, shipping instructions, and payment terms.

• Timing – Created before the supplier delivers goods or services.

• Function –

  • Ensures both buyer and supplier are aligned on requirements.

  • Provides a reference for order tracking, receiving, and payment.

  • Acts as an internal control for budgeting and approvals.

• In Practice – In systems like Figgro, a PO is often matched later to receiving records and invoices to confirm accuracy and prevent overbilling.

How to create a PO. Watch Video - Duration 1:18min