Everything You Need To Know About Purchase Order Numbers

The purchase order numbers are vital to both vendors and buyers in every transaction. It is a number that helps these parties to keep track of, organize and store their purchase orders. For businesses to understand this concept better, this article will provide everything you need to know about purchase order numbers. 

What is the purchase order number?

purchase order numbers

At the start of a contract, the customer of a product/ service creates and issues a Purchase Order. It specifies the details of a sale, such as the goods or assistance needed, the sums involved, and the agreed-upon price. In other words, the purchase order is considered legally binding since both parties have authorized it.

A Purchase Order Number, also known as a PO, is a unique number assigned to a purchase order form. Both the buyer and the seller can refer to the purchase order number during the transaction. When a seller, such as a supplier or a vendor, receives a purchase order, the two parties enter into a legally binding contract.

While purchase orders add a few extra steps to the buying process, they help to ensure that the buyer and seller have a smooth transaction from the start. They also help to reduce the possibility of completing an incomplete or incorrect order. In a nutshell, these documents enable the buyer to express their request to the seller simply and explicitly.

What role do the purchase order numbers play in your business?

Serve as a reference for future business activities

When most small businesses start, they rely on handshakes and informal processes instead of purchase orders. It is an unspoken understanding between a small-time supplier and a reliable vendor. 

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But what happens if there’s a conflict, whether it’s about a bill, quality standards, or price misunderstanding? In these cases, you’ll need a written document. A formalized system ensures that your purchases are ordered, budgeted for, and completed as your company increases in size and complexity. Purchase orders are used in this situation.

business activities

Moreover, purchase orders are valuable tools for companies to keep spending under control. Tracking expenses is more complex, prone to mistakes, and validating delivery reports become a nightmare without purchase orders.

Support inventory management

Purchase orders are documents used by businesses to order additional parts and goods from their suppliers. This process can support inventory management as it notes down the in & out items. In this way, purchase order numbers help businesses to ensure that the right product quantities are delivered within a certain time frame. With PO numbers, you can achieve total control and transparency in inventory control.

purchase order numbers - inventory

Analyze previous sales orders

PO numbers are also similar to different shelves of storage – it helps companies to store and organize a large number of items in the most sufficient way. In reality, there are many cases in which businesses have to find previous sales orders, either because customers require to do so, or for analyzing activities. Either way, it is very difficult to trace back to past sales orders manually, especially if the business has a massive number of purchases.

Without a doubt, a smart PO number system simplifies the process. Businesses can easily find the specific purchase orders within a certain time period, by staff members who processed the order, or by name of clients. 

Wrapping up

Purchase order numbers are essential to both vendors and customers, thanks to their simplicity and convenience in organizing large quantities of orders.

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Are you still looking for an efficient way to manage your inventory? Consider ConnectPOS, a leading point-of-sale provider that can help your businesses with excellent inventory management tools. Don’t hesitate to contact us for further information.

About the Author

Jacey V.

Jacey V.

Jacey V. is a content marketing intern at ConnectPOS - a leading point of sale provider. Being curious about the growth of ecommerce in recent years, she has closely followed the latest technological developments and how they have facilitated businesses to grow.

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