What is a Purchase Order Template?
A purchase order template is a document that businesses, procurement managers, and essentially other buyers use when initiating a purchase from a third party. It thoroughly describes the specifications of the products and clearly indicates the conditions and terms of the order. It also serves as a contractual agreement between buyers and sellers, and helps ensure that a clear understanding is reached between the two parties.
Purchase Order Template vs Order Form
A purchase order template can be considered as a type of order form. It is specifically created when a business is in the process of procuring a set of items, while an order form is very general and can be used in a variety of other ways such as construction material orders or repair/maintenance orders in facilities.
Another distinctive difference between the two is that purchase order templates are usually created by the buyer and sent to the seller for approval, while order forms are initially filled out by the seller and then by the buyer only according to the information already specified in the document.
Why Do You Need It?
A purchase order template is a widely-used business document that eases the monitoring of transactions in various industries, especially when purchasing large numbers of items. It helps set the expectations between buyers and sellers, and assists in managing the whole procurement process. Although this can vary depending on the purpose of the project or the company, there are a few other reasons why it’s important to consistently integrate the use of a purchase order template into your business strategies:
- Streamlines process – The use of purchase order template promotes efficiency in the procurement process. During this early stage of the process, buyers and sellers can already catch any mismatch or discrepancy, and address them before pushing through with the next part. It also helps prevent procurement delays and ensures that everything is going smoothly according to the plan.
- Protects buyers and sellers – One of the main purposes of utilizing purchase order templates is that they protect both the buyer and seller from any misdeeds from the other party. Once the seller approves the purchase order, it becomes a legally binding document that covers both parties and helps ensure that they will adhere to the terms and conditions declared to fulfill the set agreement.
- Allows for proper documentation – It is important to have a record of every transaction that a business has, especially if it’s with an external party. Purchase order templates can be used as accurate and detailed documentation of procurement transactions.
What to Include
The elements of a purchase order template can vary depending on the specifications of the business and can be modified according to the needs of the particular project. Below are items that are generally included in a basic purchase order:
- Company logo
- Point of contact
- Purchase order number
- Order information/item description
- Shipping address
- Shipping method and terms
- Shipping date
- Billing address
- Order date