Getting Started

Building Blocks

Subscription Features



Billing Features


Payment Methods

Direct Debit Payments

Configuring Gateways

Fraud Management

Hosted Pages

Attach Additional Data


Open Source Resources

Other Features

API Integration

Third Party Integrations

Purchase Order Cycle 

Purchase Order 

A Purchase Order (PO) is a document or an offer for purchase, issued by the buyer to the seller. It indicates details of the purchase such as the price, type and quantity of the product, discounts, shipment, payment terms, and so on. If the purchase order is accepted, a contract (agreement) between the buyer and the seller is formed.


  • Inventory tracking
  • Managing incoming and pending orders

Purchase Order Number (PO Number) 

A Purchase Order Number uniquely identifies a purchase order and can be defined by the buyer.

Purchase Order Cycle 

A typical purchase order cycle goes through the following stages:

Requirement Gathering

1) The specifications of the product are gathered.

2) A request for approval of the estimated purchase budget is sent to the budget department.

Budget Approval

1) The budget department receives the purchase request. If the conditions for approval are met, an approval number is allocated, signaling a go-ahead for the purchase.

2) The department then sends the purchase request along with the budget approval number to the purchase department and a copy to the requesting department.

Order Finalisation

1) The purchase department prepares a Quotation Summary (QS) with the date, budget approval number, specification of the product, delivery date, etc., and get quotations from a minimum of three vendors.

2) After obtaining the quotations, the purchase department in consultation with the requesting department, finalizes the vendor depending upon the cost, delivery time, etc., and places the order by raising a proper Purchase Order (PO).

Receipt of Ordered Products

Once the ordered products have been received with the vendor's invoice, they will be checked against the specifications detailed in the PO. The PO and the invoice need to be reconciled for the PO number, product details, etc.


1) After the PO and invoice have been reconciled, the invoice is sent to the accounts department for payment.

2) Where an advance payment is requested by the vendor, a proforma invoice will be received from the vendor. This invoice is sent to the accounts department for making the advance payment.

3) If the product is shipped by the vendor, a consignment receipt will accompany the goods, which will be used for clearing the consignment. On receiving the product to satisfaction, the invoice is sent to the accounts department for making the payment.

In conclusion, having a purchase order system allows you the following benefits:

  • Accurate purchase cost figures
  • A record of supplier history, which covers details such as the quality of products they sell, discounts, and so on. This helps you identify preferred suppliers.
  • Up-to-date visibility of incoming stock: quantity ordered, quantity shipped, quantity in transit, and so on. You also get to know when and how much to reorder, which ultimately helps you minimize back-orders.
  • Outstanding payables on any given date can be known.