As a business owner, you make a wide range of purchases every week. Whether you’re buying office supplies or raw materials, it can be a challenge to keep track of costs and control your cash flow. This is where purchase orders come in.
What Is A Purchase Order?
A purchase order is a document that your business gives to the seller when you buy goods or services. Usually, it shows all of the important details of the sale, including:
- Product name
- Price for each item
- The employee who authorised the sale
- Delivery address
Purchase orders have many benefits for your small business. To start, they help you manage prices and quantities. Imagine you order several reams of paper over the phone. When the supplies arrive, the vendor tries to charge you more than the price you settled on. With a purchase order, you don’t have to negotiate or argue. You have proof of the original deal.
Do your employees buy materials for your business? If so, purchase orders can keep spending in check. Many companies require employees to get authorisation before they issue a purchase order. That way, you can manage cash flow and put a stop to unnecessary orders.
Most importantly, purchase orders help you stay organised. This is achieved by creating a paper trail for every purchase your company makes. Not sure if an employee ordered the correct supplies for a big job? Want to know how much cash you need on hand next month? Simply check your purchase orders. This system makes it easier to pay bills on time, avoid duplicate orders and manage your budget. And you can generate purchase orders quickly in QuickBooks once you agree to the terms of the sale. This creates an immediate record that you can send to the seller and keep for your company’s accounting.