Find out how purchase order works for your business and how to use it in QuickBooks Online.
A purchase order (PO) is a document you send to your vendor to:
- state your intent to buy products or services,
- define the details of the purchase (such as quantities and prices), and,
- (if they accept your PO) an agreement with them to receive products or services under the given terms.
|Note: POs are available in QuickBooks Online Plus and in older QuickBooks Online Edition products (with optional Sales package enabled).|
How to check if the purchase orders feature is turned on in your company:
- Select Create ⨁.
- Select Purchase Order. (If you don’t see it, select Show more.)
If the Purchase Orders feature is listed but you get the message "We're sorry! Purchase Orders is turned off", you'll need to turn it on.
Turn on the purchase orders feature
There are two ways to enable purchase orders. Either select the Settings link in the message and update your settings or follow the steps below:
- Go to Settings ⚙️, then select Account and Settings.
- Select Expenses.
- In the Purchase orders section, select the ✎ icon.
- Check the Use Purchase Orders box.
- (Optional) Enter titles for up to three custom fields.
- (Optional) Enter a default message.
- Select Save, then Done.
|Note: Formatting of the PO comes from the Master Sales Form template, regardless of the template you have set. There's no way to customize purchase orders further with different content, layout, or style options.|
- Select Create ⨁.
- Select Purchase Order.
- From the Vendor ▼ drop-down menu, select or add a vendor.
- If you are shipping a product directly to a customer, select the Ship To ▼ drop-down menu and choose the customer.
- If you're using custom fields, fill them in as needed.
- In the Category details and/or Item details section, enter the purchases. Note: Only the products or services marked "I purchase this product/service from a vendor" will appear in the Item details section.
- Select Save and close to complete the entry.
Things to know when you enter a PO:
- As you enter a PO, you'll see that the status is automatically set to Open. This status will be automatically changed to Closed when all quantities and/or amounts on the PO are indicated to be received and/or paid across all linked transactions.
- You can edit an existing PO at any time to change its overall status or the status of its individual lines.
- When adding a PO, you can select a customer for each line item. To make these items billable to the customer(s), you must mark the Billable box after adding the PO to a vendor transaction.
Learn more on how to apply a purchase order to a transaction.
- If you save a PO to a transaction and then have to edit the transaction by deleting the PO, the PO will remain closed and must be manually changed back to Open.
- When linking a bill, check, or expense to a PO, the date on the transaction has to be on or after the date on the PO.
- You can't add negative line items from a PO onto a bill, check, or expense. If you'd like to record a potential refund, the best option is to record a vendor credit.
If you're receiving a partial amount on a PO or making a partial payment, you can add part of a PO to a transaction, and link multiple transactions to a single PO.
How to receive or pay part of a purchase order:
- Select Create ⨁.
- Select Expense, Check, or Bill.
- From the Payee ▼ drop-down menu, select the vendor or payee. A PO section will appear.
- To add a PO to the transaction, select Add. Details from the PO will be added on the first available line in the Item details or Category details section.
- Edit the quantity or amount for each line to reflect the portion that you would like to record as partially received or paid.
|Note: You can link multiple transactions to a single PO. QuickBooks Online automatically closes a PO when all quantities and/or amounts on the PO are accounted for across all of its linked transactions. You can manually close the PO by changing its status or by manually closing individual lines on it.|
QuickBooks Online has a number of reports that will help you with your purchase orders. Here's how to run a report:
- Select Reports.
- From the Standard tab, go to Expense and Vendors.
- Select any of the following reports to run or customize them
- Open Purchase Order List
- Open Purchase Order Detail
- Purchases by Product/Service Detail
- Purchases by Vendor Detail