In today’s shopping environment, purchase orders are a must. This helps store owners manage the purchasing process. A well-designed purchase order (PO)system can be a valuable tool for managers to track pending, completed and future purchases.

This blog will provide a brief overview of purchase orders as well as some tips for store owners to manage it efficiently.

What is a Purchase Order? 

A purchase order (abbreviated as PO) is an official document between a seller or buyer. It allows the buyer to place an order and not require immediate payment. It is also a way for the seller to give credit to the buyer without any risk, since the buyer is legally obligated to pay when the products or services are delivered.

Purchase orders contain details about a range of requirements such as the product type, quantity and price, along with the delivery timeline.

Every purchase order is assigned a unique number that allows buyers and sellers to track delivery and payments throughout the system. Your PO will be more effective if you provide more information.

Types of purchase orders

There are four types to purchase an order.

• Orders for standard purchase

The most common and easiest to understand purchase order is the standard. This order is used for one-off, irregular, or infrequent procurement. It includes a detailed description of the purchase that details the price, quantity and delivery timeframes.

A restaurant might want to purchase new tables and chairs. The restaurant owner will place a standard order with a supplier. Once the tables and chairs are delivered in a satisfactory condition, the contract will be signed.

• Planned Purchase Orders

A planned purchase order has the same information and detail as a standard purchase order. It does not include delivery and payment dates, but these are considered tentative dates. The planned purchase order must contain all the information required, including details about the goods and the costs. Once the delivery information has been determined for certain items, the release will be issued to confirm the delivery date.

A company might plan to purchase 120 articles each year. To order ten articles each month, they will place a plan purchase order with a supplier. The company must sign a release in order to confirm each order’s delivery date and place.

• Blanket orders

A blanket purchase order can be the same as a planned order but does not include delivery information and it does not specify a quantity. A blanket purchase order may contain pricing that is not confirmed.

This type of order is used to repeatedly procure a set of items from a supplier such as primary materials and supplies.

A business may need to purchase ink and printing paper regularly to be able to service a large number of customers. They may place a blanket order with their supplier.

• Contract purchase orders

A purchase order only confirms the details of the vendor, and possibly payment and delivery terms. The products that will be purchased are not listed.

Contract purchase orders are used to establish a supply agreement between a buyer and vendor. This is the basis of an ongoing commercial relationship. When placing a standard purchase order, the purchaser can refer to the contract purchase orders.

What is the process of placing purchase orders?

The journey begins with the purchase order process. The journey begins when buyers make a purchase for a product or service to their business. The PO number includes the shipping date, billing address and product request. It also contains price, quantity, and price.

The seller accepted the purchase order and confirmed that the company could fulfill it. The seller will cancel the purchase order if the buyer does not accept it.

Once the order has been accepted, the seller will begin to prepare all necessary items by reviewing the inventory and scheduling the personnel.

The buyer can track the PO number in the packing list once the order has been shipped. This will allow them to know when it will arrive.

The seller will then issue an invoice with the PO number. This allows for easy matching with delivery information.

According to the terms of the purchase order, the buyer will pay the invoice.

How do you manage purchase orders on e-commerce sites?

• Customize purchase order numbers depending on your intention

Online stores can handle thousands to hundreds of orders per month. The store owner must deal with a lot of information about each order. The purposeful creation of an order number helps you keep track of your orders and monitor their status.

The information is not necessarily in every order that business doers need to remember or go through. If there is an order that stores must review or track, they just need to find the code in order to search for more details.

For newly-established stores, the number of orders is still very low. They don’t want to order in order to show their customers how many orders they have. This can lead to a decrease in their store turnover.

Your rivals will find it risky to expose the details about their business performance through the purchase order number. If your business is doing well, they can copy your marketing strategy. They will also take advantage of the chance to dominate the market.

• Bulk orders allowed

Customers can order bulk quantities from an e-commerce store. Customers can order as many products as they wish, particularly for B2B shops. This reduces the number of orders an online shop must manage.

The Mageplaza Quick order extension for Magento is a powerful tool to enable customers to place bulk orders.

• You can use a barcode or an advanced shipping note.

Buyers can give advanced shipping notices with the barcode labels for each product to be included in all incoming shipments. This will allow the seller to quickly identify which products arrived at the dock via barcode scanning. It allows you to quickly remove products from your dock and eliminates any errors that can be caused by manual receiving.

The barcode allows shop owners to quickly control stock systems. They can easily identify each item and associate it to a valid PO. Your staff can quickly check the barcode of the product if it is in stock at the warehouse.

• To control your order easily, set the invoice number to depend upon an order number

The automatic system handles the issue of order number and invoice numbers. It is important to send customers a copy of their purchase order, shipping information, and an automatic invoice once they have completed their shopping trip in your store. Clients will be able to see the estimated delivery time and the time it took to pay for the order by attaching an email.

Not only is it professional, but customers will also be more confident if documents are sent promptly

The shop owner must match information to create invoice numbers based upon the order number in order to easily manage the order numbers and invoice numbers. This will make it easy for the customer to pay the bill.

Conclusion

Purchase orders are essential to all business operations. The contract between the buyer or seller contains crucial information that allows both parties to track and fulfill their orders. Online orders are expected to increase with the advancement of e-commerce. Order management is a key aspect of a store’s success.