How does a purchase order work?
- Each PO carries a unique number, the supplier, line items with quantities and prices, a delivery date and payment terms.
- It is approved before it is sent, with the approval threshold set by value so small orders are not slowed down.
- The supplier confirms acceptance, and any change in price or date is recorded as a revision rather than a phone call.
- Goods received are booked against the PO, which exposes short deliveries before the invoice arrives.
- Accounts payable matches PO, delivery note and invoice, and pays only what all three agree on.
A worked example
A cabinet maker in Wisconsin ordered hardware by phone and paid whatever the invoice said. Prices had drifted up over two years without anyone noticing. An assistant introduced numbered purchase orders: agreed price on the order, confirmation from the supplier, receipt booked against the PO, then three-way matching before payment. Two suppliers were billing above the agreed rate on a third of the lines. The correction paid for the process within a quarter.
Where does a purchase order show up in your tools?
POs are raised in QuickBooks Online, Xero, or a procurement module, with the approval trail kept in the system rather than in email. Receiving is booked against the same record so a short delivery is visible before accounts payable sees the invoice.
Common mistakes
- Raising the PO after the goods arrive, which turns the control into paperwork and catches nothing.
- Leaving the price field blank or writing to be confirmed, which removes the only thing worth matching.
- Paying an invoice that exceeds the PO because the amount is small, which teaches suppliers the limit is soft.
Why does a purchase order matter?
A purchase order is the point where a business agrees what it will pay, before the money is committed. Without one, the invoice sets the price and nobody can prove otherwise. For a small business with thin margins, three-way matching is one of the few controls that pays for itself quickly.
How does AssistBPO handle a purchase order?
Our procurement assistants raise purchase orders against your approved supplier list and price agreements, chase confirmations, record receipts and run the three-way match before an invoice reaches you for payment. Any mismatch is queried with the supplier and reported with the evidence attached. Approval authority stays entirely with your team.
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