How to make a purchase order template
What's the best way to streamline your purchasing process? Standardizing your purchase orders through a purchase order template can help you save time and keep an official record of your company's purchases.
Below, we'll show you how to create a purchase order template and integrate it into your regular business practices.
What are purchase orders?
A purchase order is a document sent by a buyer to a supplier with a request for a product or service. The order form will contain information about both companies, as well as details about the transaction and payment terms.
Purchase orders should also include a purchase order (PO) number. This unique number is used for accounting purposes and can be used for recordkeeping. It is also helpful for companies that require authorization for business transactions.
Purchase orders have the same legal weight as a business contract. Once a seller approves the purchase order, the price of the goods and services are locked in, as is the anticipated date of delivery.
Prior to this approval, you and the vendor are free to negotiate the terms of the transaction.
Free purchase order template
You don't need special software to create and send purchase orders. You can simply download one of the free purchase order templates available online.
We've organized suggestions for these templates according to format, so you can choose the file type that best suits your business.
Vertex42 provides a purchase order template that can be downloaded as an Excel file or used with Google Sheets, which is Google's version of an online spreadsheet. Users can also download the purchase order template for use as a Word document. Once you're finished creating the invoice, you can always convert this document to a PDF file if you have the right tools on your computer.
TemplateLab provides 18 different purchase order templates to choose from, and these order forms can be downloaded as a Word document, Excel file, or a PDF version. Users can select a template based on style, though several templates are tailored to specific industries (fabric, fashion, graphic design, etc.).
Invoice and purchase order templates at Invoice2go
Of course, if you're looking to create an invoice or purchase order, look no further. Here are the available free invoice templates and purchase order templates at Invoice2go, a Bill.com company. We offer multiple invoice templates that can be used for freelancers, consultants, or construction companies. Each free template can be downloaded as an Excel spreadsheet, a Word document, or a PDF file.
How to make a purchase order template
Keep in mind that your purchase order form template will initially be blank, though it will contain a number of prompts for you to fill in all the details associated with your company and the sale.
If you're unfamiliar with the purchase order process, we'll walk you through the steps you'll take to complete this order form.
You can use these steps to fill out the order form template you found online, or you can create purchase orders of your very own. Either way, every purchase order template should contain the following details:
1. Create a prominent spot for the purchase order issue date
This simply refers to the date at which the purchase order is submitted to the vendor. If you're using a purchase order spreadsheet, your software may be able to fill this in automatically, which can save you time and ensure greater accuracy.
2. Add your company logo
This is your official order form. Why not make it look professional? Include your company logo, if you have one. If you’re an Invoice2go subscriber, we have free tools to help you design your logo quickly.
If you don't have an official logo, you should at least include your company name in a distinct font that's larger than the rest of the text in the document.
3. Create customized sections for contact information
Every purchase order template should begin with the contact details of the buyer and seller. You'll begin with your company address and then include your seller's contact information.
It may even be helpful to specify a singular point of contact, depending on how many employees work for your organization. If you have someone who oversees your accounts payable department, you might include their name on the purchase order, as well.
Once again, if you're using a purchase order spreadsheet, you may be able to automatically populate the vendor section by selecting from a prepared vendor list. This can streamline the entire process, which is essential if you make frequent purchases from a major vendor.
4. Add the purchase order number
Next, you'll include the purchase order number beneath the contact details, typically on the left-hand side of your purchase order form template.
If this is your first purchase order, you can simply make up a new PO number such as "001." Your subsequent purchase order forms will increase the PO number accordingly (002, 003, 004, etc.).
5. Fill in the request for products or services
Arguably, the most important part of your purchase order form is the request for goods or services. Depending on your vendor, you may need to specify a particular unit number for each product or the description of specific services. If no such number exists, try to provide as clear a description as possible to avoid confusion.
Make sure to include the unit price of each item on your order form. This will later be used to calculate your total, and it will make it easier to adjust your order if an item is out of stock or otherwise unavailable. Many companies provide a price list that can be used to determine individual unit prices, as well.
When a customer is ordering large quantities of the same product, you may include both the unit price and the cost of the entire quantity of what you order.
For example, you might list "Fabric" and specify "3 yards at $1.00/yard" with a total of "$3.00." This may depend on the format of your purchase order form template, but if your template specifies quantity, it can make the ordering process more clear.
6. Add in sections for the order totals
Next, you'll use the unit prices in the previous section to calculate subtotals. This subtotal will be recorded on the order form, though this will not necessarily be your final total.
You'll also need to add in any applicable sales tax, along with any special pricing considerations (such as discounts or promotions) that may influence the final costs. Finally, you'll need to factor in shipping costs to your grand total, which will depend on the terms set by your vendor.
7. Outline the payment terms
Your purchase order should also communicate essential payment details. Make sure to use a payment method that your vendor accepts.
When ordering large quantities, some vendors may ask for a down payment after receiving your initial purchase order, though in most cases, vendors will request payment through the usual invoicing process.
8. Outline the shipping method
Next, you'll want to include information on shipping terms. Small purchases can generally be handled through the usual consumer shipping process, but larger orders will require additional considerations.
For example, some vendors have an FOB origin (also known as shipping point) arrangement in place. In this arrangement, the buyer accepts delivery of the goods at the point of origin, which is when the shipment leaves the vendor's shipping dock. This makes the buyer responsible for the entire shipping process, including the related expenses.
This is why it's important to contain as much shipping information as possible so that both you and your vendor have a common understanding of the entire transaction process.
9. Emphasize the delivery date
Finally, your purchase order should include a requested delivery date. This date refers to the exact date you expect to have your vendor's products in your warehouse.
How much time should you allow between your purchase order and your final delivery dates? This may vary by industry, as well as the quantity of goods you're ordering.
Some suppliers may communicate delivery times in their shipping information (e.g., please allow 2 weeks for delivery), though if you need expedited delivery, you may be able to negotiate faster shipping for an additional fee.
How the purchase order process works
Once you create a purchase order template, you'll be able to make it a regular part of your procurement process. Exactly what happens when you use a purchase order? To give you a better understanding of what to expect, we'll outline how the sales process usually works.
1. Create and send the purchase order
First, your company will create and send a purchase order containing all the details above. Some companies may have an internal review process, wherein purchase orders require authorization from the accounting department. Once the order is approved, it is sent to the supplier.
Always retain a backup copy of each purchase order. You might also request confirmation of your purchase orders, which can protect you if a vendor fails to deliver or tries to charge more for an item than what is listed on the price list.
2. Vendor reviews order
Once the vendor receives your purchase order, they will review your order details and approve the order. If there is an issue with the order, your vendor can contact your company and request a new or revised order form.
After the seller accepts the purchase order, the sale is locked in, and the purchase order takes on the same legal force as a contract.
3. Goods and services sent
The vendor provides the goods and services on the delivery date requested in the purchase order. Look for a packing slip, which will give you a description of the quantity of goods you've received. This can then be cross-referenced with your initial order form.
Keep in mind that this slip is not the same as an invoice, which will be sent to you by the vendor.
4. Sales invoice sent
Finally, the vendor will send you an invoice to request payment for their goods and services. This is a separate document that should largely mirror the details on your purchase order, though the invoice will also communicate other details such as payment terms, deadlines, and any penalties for unpaid invoices.
Make invoicing a snap
At Invoice2go, we specialize in helping small business owners, freelancers, and other entrepreneurs thrive in a fast-paced world. Our mobile app allows you to send invoices and get paid on the go, providing additional tools that can help you get paid faster and secure more clients for your growing business.
If you sign up for free, you'll get 30 days of access to our tools and resources, including invoice templates that you can customize with your unique company information. We'll help you look professional,and make your invoicing process easier than ever before, giving you the competitive edge you need, regardless of what industry you serve.
Frequently asked questions about Purchase Orders
If you're new to the world of business, don't sweat it. We love great questions. Here are some of the most common ones we hear about purchase orders:
A purchase order and an invoice differ in three major ways: their sender, their purpose, and their timing.
Purchase orders are sent by a buyer to make a purchase. Invoices are sent by a seller to a buyer to obtain payment for that purchase. This means that buyers send purchase orders prior to the sale taking place. A seller sends an invoice once the sale is finalized.
Once the seller accepts the purchase order, it becomes a legally binding agreement. This means that sellers cannot change the price of their items or services once the order has been approved.
If a seller should try to alter their price list between the purchase order and invoice, you are not obligated to pay these new, higher costs.
For the best legal protection, you should always save a backup copy of your purchase orders. This separate copy can prove valuable if a dispute turns into litigation. Obtaining a purchase order confirmation from your seller can also prevent you from facing bad business practices.
While the Microsoft Corporation offers a variety of templates for their software programs, they currently do not have any dedicated purchase order templates. However, the free templates listed above are compatible with Microsoft Office applications, including Word and Excel.