what's a purchase order

What’s a Purchase Order?

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. 

Purchase Orders

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

Purchase orders include a lot of critical information. Some of the things purchase orders 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, purchase orders are important and have many benefits for eCommerce businesses. For one, purchase orders 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, purchase orders also come with some challenges. For one, purchase orders 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 purchase orders is the main challenge. Of course, manual paper purchase orders are not really a feasible option. If you try to manually create, send, and manage purchase orders, you will end up with a mess. Manual purchase orders are prone to human error, misplacement, and difficulty tracking. 

 

Automate Purchase Orders

The best solution to ensure that you seamlessly handle all of your purchase orders is to use digital purchase orders. Listing Mirror makes it easier than ever to manage all of your inventory processes, including purchase orders. Send and receive purchase orders in a breeze with the Vendor Catalog and monitor using the Listing Mirror app. With Listing Mirror, the purchase order process is straightforward and organized. 


In addition, Listing Mirror’s #1 multichannel product listing software will allow you to experience big business power with small business care through listing data management, order fulfillment, inventory syncing, and warehouse management. Simplify purchase orders and every other aspect of your eCommerce business with Listing Mirror. Don’t just take our word for it, try our incredible software free for 14-days HERE.