A purchase order, or PO, is a critical document that you will need for your eCommerce business. To successfully and accurately run your business, you must know what a purchase order is. In this post, we will explain all the basics about a purchase order and how to seamlessly manage them.
A purchase order is a legally binding document that the buyer sends to the seller. In this document, the buyer explains the specific products or services that the seller will deliver. POs allow the buyer to place an order and then pay according to the timeline described rather than paying immediately. The seller can expect payment once the products/ services are delivered.
Every PO has its own number, which helps both buyers and sellers track the delivery and payment. In terms of eCommerce, many eCommerce businesses send POs to vendors or supplies. Of course, you may need products on an ongoing basis, so you can send a blanket PO that commits you to buy the products and services until a certain maximum is reached. You may also send recurring POs.
Parts of a Purchase Order
include a lot of critical information. Some of the things specify are:
- The billing address
- The payment terms
- The product/ service being purchased
- The delivery location and date
- The price per unit
- SKUs or model numbers
- The quantity being purchased
How to Use a Purchase Order
POs should actually make the purchase process easier. For example, as the buyer, you decide that you want to purchase products from a vendor. You then issue a PO to the seller, typically electronically. The seller obtains the PO, and will confirm that the company can fulfill the order. If the seller is unable to complete the order, they will tell you and cancel the PO.
If the seller can fulfill the PO, then they will prepare the order by locating the inventory and scheduling the necessary tasks. When the order is shipped, the packaging will include the PO so that you know which order the package corresponds to. Next, the seller invoices you for the order, again referencing the PO number. As the buyer, you pay the invoice based on the terms in the PO.
As you can see, are important and have many benefits for eCommerce businesses. For one, help ensure accurate inventory and financial management. They allow you to keep track of what you order and what you will owe, so they facilitate better budgeting. You must have the necessary funds before you can issue a PO. additionally, POs ensures faster delivery because they allow the seller to schedule deliveries when the buyer needs it.
Purchase Order Challenges
Despite their many advantages, also come with some challenges. For one, add even more paperwork, and this can be overwhelming for businesses that many many smaller purchases. In terms of financial organization, credit cards really offer the same purpose.
Managing is the main challenge. Of course, manual paper are not really a feasible option. If you try to manually create, send, and manage , you will end up with a mess. Manual are prone to human error, misplacement, and difficulty tracking.
The best solution to ensure that you seamlessly handle all of your is to use digital . Listing Mirror makes it easier than ever to manage all of your inventory processes, including . Send and receive in a breeze with the and monitor using the Listing Mirror app. With Listing Mirror, the purchase order process is straightforward and organized.
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