To remain successful in the long run and to make things easier, business owners require a purchase order. Further, a purchase order keeps check on inventory levels, tracks stock records and many other tasks. In this article, we shall discuss how retailers can benefit from purchase orders and what their significance is.
Definition of Purchase Order
“A purchase order (PO) is a commercial document and first official offer issued by a buyer to a seller indicating types, quantities, and agreed prices for products or services.”
Difference between a Purchase Order & an Invoice
Purchase Orders and Invoices are similar in many ways. Firstly, these both are legal documents. Secondly, they both contain information regarding the order. However, the invoice contains a bit more details regarding the order as compared to Purchase Orders. Further, the major difference between a purchase order and an invoice is that the invoice requests for the payment, however the purchase orders simply confirms the order. Moreover, the seller sends the invoice. On the other hand, it is the buyer that sends purchase orders.
Details included in a Purchase Order
Certainly, it is important for retailers to know first what must be included in the purchase orders. Although, we can say that purchase orders vary depending on each company’s requirements and needs, however, there are a few basics that mostly all purchase orders contain. Let’s see what these basics are. Firstly, the document must contain the name and address of the buyer as well as the seller. Secondly, the product purchased and their quantity must be mentioned in the purchase orders. Thirdly, the purchase order’s number, price, date of delivery, delivery address and other significant terms and conditions must also be included in the document.
Benefits of a Purchase Orders
There are a number of benefits for retailers as well as the buyers when it comes to purchase orders. Firstly, retailers as well as the buyer have record of the item they bought/sold. As a result, they can use purchase orders to verify things if needed. Secondly, it helps build great vendor customer relation. Thirdly it helps save time. The purchase order process becomes simple once the system is all set. Further, another great benefit is that if there are repeat orders, they can automatically generate purchase orders. Moreover, it saves time when the order is received. That is to say, the purchase orders are easily accessible. Therefore, retailers can easily check with the purchase orders and the delivery received.
In addition, because these are legal documents, therefore both the parties are secure. In other words, they are bound to work right because they are aware of the legal consequences that might arise in case of a dispute. For example, in case the order was incorrect or the ordered quantity has not been received, so, retailers can claim their order by having record of the purchase orders, which clearly states the purchase orders and the amount ordered.
How to Implement Best Purchase Order Practices
Let’s now see which practices retailers can adopt in order to ensure the right working and processing of Purchase orders.
Simplify the Purchase Orders Process
First and the foremost thing is to go digital with the purchase orders. That is to say, digitizing the entire process will save time and effort. Further, it also reduces the chance of errors and simplifies the entire procedure. In addition, it keeps record of old purchases, which helps provide easy access to records when needed. Therefore, having a good POS System also helps simplify the purchase order’s process.
Employee Training for Purchase Orders
Secondly, train the employees well when it comes to the processing of purchase orders. That is to say, employees should be aware of the procedures and policies of purchase orders. Further, a guide can be created for employees so that they can learn gradually and find about their query when needed.