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What Is a Purchase Order and How Do I Make One? [Template + Example]

Purchase orders are great pieces of documentation that no business can do without. They’re not just for keeping track of what’s spent but also for managing supplies.

So, to avoid issues related to lack of documentation, you need to create a purchase order.


If you don’t know how to make one, then stick around; we’ll get into that later in this post. But for you to fully appreciate the value of purchase orders—which in turn will help you understand how to create a purchase order—we’ll first explain what purchase orders are, their different types, and their basic elements.

We’ll also provide you with samples of this essential piece of documentation.


Purchase Order Definition

A purchase order is a legal document in which a business expresses the intent to purchase particular goods or services for a certain price.

In layman’s terms, you can simply think of a PO as a very formal order request. 


If you’re still not confident about what to answer when asked by a colleague “What are POs?”, consider it as an invoice but from the perspective of the buyer.

Therefore, there’s a lot more information focused on order details instead of just the final amount. You will also need to include other information, all of which we’ll discuss in the next sections what it should contain.


How Does a Purchase Order Work?


1. Determine Which Items to Order

Based on the existing offer of the seller, identify what you need and their specific quantities. If you’re afraid of ordering too much, use last year’s numbers for reference.


2. Create the Purchase Order

To improve your odds of approval, make sure to give the supplier ample time to fill your order.


3. Wait for the Seller to Confirm the Order

Here’s where you see the PO meaning in business. Based on what you sent, the seller will determine if they can fulfill the order. If they can’t, go to step 2. If they can, they’ll send you an approved version of your purchase order.


4. Complete the Transaction

The seller will deliver what’s promised, and you’ll pay what’s on the invoice.


Types of Purchase Orders 


4 types of purchase orders

Image Source: WallStreetMojo 


There are four main types, as follows:


  1. Standard Purchase Order – Used for one-time purchases.
  2. Planned Purchase Order – Applicable for long-term contracts where the complete delivery of goods is not set on a specific date.
  3. Blanket Purchase Order – This is usually used if you’re getting something in bulk, like an RTW company buying fabric.
  4. Contract Purchase Order – The terms of the purchase are clearly outlined in a contract, as is the case when a huge company is outsourcing its staff from an agency.


The Basic Elements: What Does a Purchase Order Look Like?


  • Header. This includes relevant company information like the logo, business address, contact information, purchase order number, and date of issue.
  • Information of Recipient. When you make a PO, you should also include the seller’s information. Don’t forget to include the name of your contact there.
  • Shipping Details. For physical goods, you’ll need to specify where and how the order is to be sent, along with other details like the delivery date and insurance.
  • Order Details. Like the sample PO in the next section, provide the order name, quantity, and other relevant specifications.
  • Order Summary. Provide how much the total will be, accounting for taxes, discounts, and other potential costs.


Examples of Purchase Orders

Given how useful a PO can be, they are already widely used across various industries. This means that, in your field of work, there should be at least one example purchase order for you to review.

Here are a few of our favorites:


  • Electronic Purchase

electronic purchase orderImage Source: TemplateLAB


  • Interior Design

interior design purchase orderImage Source: TemplateLAB


  • Wholesale Buying

wholesale purchase orderImage Source: TemplateLAB


  • Graphic Design

graphic design purchase orderImage Source: TemplateLAB


  • Construction

construction purchase orderImage Source: TemplateLAB


But really, what is the PO here? All of them! Among these five, you’ll see that there are a lot of similarities.

At the same time, it’s important to note that they were all still tweaked to more effectively communicate what the buyer wants out of the transaction.


Basic Template for Purchase Orders

Are the differences in content in the previous section confusing you? You don’t have to make your POs exactly as you see them on those samples.

Start with this purchase order template, and go from there.

Basic Purchase Order

Image Source: TemplateLAB


If you have a creative flair, don’t be afraid to modify this template to show a little more of your artistry.

You can also arrange the different elements as long as the document still makes sense. The most important thing is that you’re communicating your message clearly.


Tips on How to Make a Purchase Order

It’s not enough to know just the foundations because, in the end, your goal is to bring clarity to anyone who may need to look at the document.

And if you don’t achieve that, the purchase order’s meaning and purpose are lost.


Therefore, it’s not just for the sake of following guidelines that you should follow the tips in the following subsections.

After all, answering the question “What’s a purchase order?” is not an academic exercise. So let’s make sure your efforts don’t go to waste by taking to heart our recommendations:


Be Specific

This is especially important if your supplier is selling various variations of the same product. If you just put “red fabric” when there are at least ten shades of red, it may take longer for you to get your order as well.

If it’s a custom order, a good PO example would have specific descriptions for the product or service ordered.


Having this element will help hold both parties accountable because both of you know exactly what the payment is for.

A good example here would be the interior design example of PO because it even includes a photo of the product.


Make Sure All the Details Are Correct

Could you imagine having your order shipped to an address across the city? Or perhaps getting too much of one item?

The last thing you want to happen is to accidentally order 5,000 chairs when you only need 50. If this happens and you can’t pay for your order, your supplier may terminate their relationship with you.

Worse, they may legally compel you to pay for everything.

So, just as important as knowing how to create PO is including accurate details. Getting someone else to look over your purchase order before sending can also go a long way. 


Leave Remarks, If Necessary

Like leaving descriptions on each product, remarks may be useful to further give context to what the order is about.

For example, are there other supporting documents to prove the accuracy of the purchase order?


If you want to make a purchase order that’s approved by a certain date, you may also leave this in the remarks. This ensures that you have enough time to talk to other suppliers as well.

There may be certain requirements that apply to all line items. In that case, it will be better to leave it in the remarks section. 


What Is a PO? Your Way to Avoid Miscommunication with Your Suppliers

Maintaining a good relationship with your supplier helps prevent issues with gathering the resources you need in the future.

We’ve shown you more than one example of purchase order forms, and we hope you’ve found inspiration to help you in making any for your business when the need arises.


If you feel that you can’t do it yet by just looking at samples, revisit our template purchase order and modify it as you see fit.

Don’t have a dedicated person to manage your vendor relations? Having a clear purpose for creating one would do a lot in making everything much easier!


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