Business and Personal Finance: Creating Purchase Orders

Controlling Purchase Costs – Creating Purchase Orders

If your company sells products, it first needs to buy them. In order to avoid potential inventory snafus, most buying companies use purchase orders to confirm the details of the agreement.

When you deal with vendors, especially new or troublesome vendors, a purchase order is your safety net. These documents come from your company, and they specify exactly what is being purchased.

Purchase orders typically include the following information:

  • Quantity being purchased
  • Item number and/or description
  • Agreed-upon unit cost per item
  • Extended total cost (quantity times unit cost)
  • Applicable sales tax
  • Expected delivery date
  • Agreed-upon payment terms

In addition to product and payment specifications, the purchase order includes contact information for your company, the name and address of the vendor, and the person (on the vendor side) whom you dealt with when agreeing to the purchase. Purchase orders also come with unique identifying numbers, to make tracking easier for both you and your vendors.

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