Are Purchase Orders Necessary?

PPPV1 · ‎February 10, 2022

This may be a stupid question, but do we have to use a purchase order for receiving supplies? I haven't been using them as it seemed redundant when I can just add the bill when I receive inventory.

Here are my steps: I order from my vendor (without a PO). Supplies arrive with their invoice. I enter a new bill for the invoice under the appropriate vendor including each item, the amount received and the costs, so it updates my inventory. When the bill comes due (there are usually several invoices to be paid to that particular vendor each month), I use PAY BILLS and add the appropriate bills to be paid all at once. When the payment goes through my bank account, the transaction clears by matching to the BILL PAYMENT.

Could anyone explain what the importance of using a PO is? Am I messing something up by not using a PO? And if I must, is there a way to go back and add a PO to all of those previous bills? I'm using QBO PLUS.

Thank you for your help!

AlcaeusF · ‎February 14, 2022

Hello @PPPV1,

Thank you for getting back and for providing clarification about your question. Allow me to chime and share additional information about purchase orders in QuickBooks Online.

A Purchase Order (PO) is a non-posting transaction and doesn't affect your accounting. When entering transactions in QuickBooks, It would be best to mirror it out on how it's happening on the actual.

It's not necessary to enter this type of transaction before entering a bill into the system. If you've decided to include POs, I recommend adding them to your future transactions.

If you want to include the part where you tell vendors your intent to make a purchase, you can do so. It's optional, but please note that you can only apply a PO if there's no bill created yet.

If you need the steps, check out the article attached by my colleague @TirzahC. The link contains detailed instructions about how to apply POs to expenses and bills.

Additionally, you can visit this link to learn more about the reports you can use for your purchase orders in QuickBooks: How to run purchase order reports.

Fill me in if you need more guidance in entering transactions in QuickBooks. I'm always available to help. Take care always.

View solution in original post

TirzahC · ‎February 10, 2022

I'd be happy to share some insight about purchase orders , PPPV1.

The expense transaction screen will display a list of all types of posting and non-posting expense transactions. This includes the Purchase orders which is a non-posting type.

The system allows you to use the purchase order for one transaction only. Once it has been copied to a bill, the status will be closed automatically and can't be linked to another entry.

To get your work done, you'll need to create another purchase order for the remaining bills that you have. This way, you can link them successfully.

Check out this article for more information: What Is A Purchase Order.

Furthermore, check out the following articles below on how to add an accepted purchase order to a transaction for your vendor and other related topics:

Let me know if you have any other questions. I'm always ready to help. Stay safe!

PPPV1 · ‎February 14, 2022

Thank you for contributing TirzahC. I guess my most important question was whether or not I even need to use a PO, since I'm already entering a bill for the order after I receive it?

AlcaeusF · ‎February 14, 2022

Hello @PPPV1,

Thank you for getting back and for providing clarification about your question. Allow me to chime and share additional information about purchase orders in QuickBooks Online.

A Purchase Order (PO) is a non-posting transaction and doesn't affect your accounting. When entering transactions in QuickBooks, It would be best to mirror it out on how it's happening on the actual.

It's not necessary to enter this type of transaction before entering a bill into the system. If you've decided to include POs, I recommend adding them to your future transactions.

If you want to include the part where you tell vendors your intent to make a purchase, you can do so. It's optional, but please note that you can only apply a PO if there's no bill created yet.

If you need the steps, check out the article attached by my colleague @TirzahC. The link contains detailed instructions about how to apply POs to expenses and bills.

Additionally, you can visit this link to learn more about the reports you can use for your purchase orders in QuickBooks: How to run purchase order reports.

Fill me in if you need more guidance in entering transactions in QuickBooks. I'm always available to help. Take care always.

PPPV1 · ‎February 15, 2022

Thank you AlceusF. I guess this answers my question. I only regularly order supplies from 2 companies and receive the items within a few days and I receive a response with my order details at the time I place the order, so it just seems like an unnecessary step to make a purchase order first. I was just curious as to why all of the tutorials and responses I see in the community make it seem like everyone should absolutely be making a purchase order first. The purchase order reports that are available don't really seem to add any benefit to me. I guess maybe if my business placed multiple different orders per day to multiple different suppliers, it might be handy for keeping on top of things.

StevieBgood · ‎June 01, 2022

This is my question as well. I want to use it for generic purchases as well as for fixed asset creation. When using the purchase order it seems redundant. my folks are currently entering every line item to a some complicated quotes. What they don't do is create a new "Item"' for each element of the quote, so I am left with a great number of miscellaneous items that all go to the same COA account since an "Item" is attached to various COA accounts depending whether its inventory, purchase, or sale.

Needless to say I have some unraveling to do

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Are Purchase Orders Necessary?