Why Purchase Order Numbers are Crucial for Your Small Business?

The initial step of a purchasing process is issuing the estimates from the seller’s side. Then the client issues the purchase order. As the next step, the purchasing process gets completed and the invoices are issued. After receiving the payment, the receipt will be issued. 

But the first official document issued from the client’s side is the purchase orders. If you are unaware of purchase orders, then this blog gives a detailed view about them. 

What are Purchase Orders?   

A purchase order is an official document that is issued by the client to the seller to confirm the purchase. These purchase orders are forwarded as a reply document to the seller. Some crucial details must be included in the purchase orders, and they are as follows:. 

1. Purchase Order Number: 

Each purchase order has a unique purchase order number. This unique number helps in tracking and following up on the purchase orders. 

2. Client and Business Details: 

The client details include the name, contact number, physical address, etc. The business details include the name of the business, contact details, and address.  

3. Description of the Goods or Services: 

The description of the goods or services that the client chooses along with their required quantity. 

4. Pricing: 

The price for each item selected along with its unit price, tax amount, etc.  

5. Payment Methods and Terms: 

The payment methods accessible to the client should be mentioned in the purchase order. 

Complete Process of Purchase Order Creation: 

In the generation process of the purchase order, the client will fill out all the essential details. This filling procedure can be easily done by using the purchase order templates available in the invoicing software for small businesses. After entering all the details, the client will forward it to the seller.  

The seller reviews the purchase order and makes a confirmation that the items listed by the client are available with them. After this confirmation, the delivery process of the goods and the invoices takes place.  

In this whole process, the purchase order number plays a significant role.  

Let’s see how a purchase order number should be.  

Format of Purchase Order Number:  

A purchase order number is a unique number mentioned in the purchase order. The purchase order number must follow a standardised format. This format may include alphabets, special characters like a hyphen, a date, and a sequential number (e.g., PO-001). This formatting may vary according to various departments. 

Using Software for Purchase Order Number Generation:  

As purchase order numbers are crucial for various purposes, they can be created by using accounting software or using a purchase order generator. This software helps in maintaining a continuous order of numbers. Also, this generator won’t give duplicate numbers, so confusion can be avoided. 

Why Purchase Order Numbers are Important:  

The purchase order number is essential for various reasons, and some of them are mentioned below. 

1. Easy Tracking:  

The unique purchase order number helps in identifying the purchase order and handling it effectively and promptly. 

2. Inventory Management:  

It also helps in managing the inventory. The data mentioned in the purchase order and the stock availability can be compared, and effective decisions can be taken regarding the management of the stock level.  

3. Auditing Purpose:  

As the purchase orders have unique identification numbers, it is easy to file them for auditing purposes and serves as evidence in case of any legal disputes.  

Top Mistakes to be Avoided in Purchase Order Numbering: 

Some top mistakes to be avoided in purchase order numbering are as follows: 

1. Manual Entry: Mistakes in purchase order numbers can emerge if they are mentioned manually. 

2. Duplicate Numbering: Duplicate numbers create confusion and misunderstandings in the purchase order generation process. 

To avoid such mistakes, invoicing software like InvoiceTemple can be used, as it performs automatic generation and accurate calculations. 

A purchase order number is as crucial as an invoice number. To maintain professionalism and consistency in the business, utilise InvoiceTemple and perform a smooth business flow from start to finish.