Key takeaways:

Learn the purpose of the PO template and different types of purchase order templates
Understand the factors that make a good PO template
Explore the information present in a PO template elaborated with a few PO template samples

Purchase orders are an essential business need that act as binding documents or contracts between buyers and sellers. Purchase orders optimize operations, improve transparency, and help track inventory efficiently.

Say your business has thousands of products supplied by hundreds of distributors. You will need to order respective products from them frequently to ensure sufficient stock levels. Brainstorming the fields, structure, and details to be maintained during each purchase is a tedious process.

In such a scenario of repetitive tasks, standardizing the process with a well-defined purchase order template can help streamline the purchase process, reduce time, minimize efforts, and ensure smooth procurement operations in your business.

What is a purchase order template?
Purpose of PO template
Types of purchase order templates
What factors make a good PO template?
What information does a PO template contain?
Purchase order template samples

What is a purchase order template?

A purchase order template, or PO template, is a legal and commercial document generated by the buyer with all essential details regarding the transaction as informed and confirmed to the seller.

It is a mutual agreement between both the parties carrying details of items to be purchased, their quantities, prices, and delivery instructions that helps track the purchases and expenses at any time.

Purpose of PO template

Standardization of process

Having a purchase order template streamlines the procurement process with a standard format for raising purchase orders. Standardizing the PO template saves time and reduces errors in making purchases, as the process becomes clearly defined.

Single source of truth

A PO template containing all necessary information regarding the item, its description, quantities, price, and other agreed terms and conditions acts as a single source of truth to refer to anytime during future transactions and misunderstandings within parties.

Easy and quick purchases

A well-crafted and efficiently organized purchase order template enables the purchase team to raise purchase orders in no time. Even for a first-timer, a neatly structured PO template becomes handy to start purchases immediately.

Ensuring compliance

Purchase order templates with sufficient details and fields related to taxes, payment terms, and logistics ensure legal, commercial, and technical compliance. It facilitates easy accounting, auditing, and statutory needs.

Improved consistency

Establishing a purchase order template improves clarity and ensures consistency in the purchasing process. It assures both buyer and seller are on the same page during the purchase and rules out any ambiguity.

Types of purchase order templates

There are commonly five types of purchase orders based on the PO template.

i) Standard purchase order

It is the most basic type of purchase order and most commonly used. This PO template includes an item with its description, quantity, prices, payment and delivery terms.

The buyer is completely aware of the details of items to be bought. This purchase order is usually used for one-time purchases or infrequently demanded items.

ii) Planned purchase order

In this purchase order template, details of the item, price, and payment terms are already known. However, the quantity is estimated based on educated guesses, and the delivery date is uncertain.

The purchase team forecasts the demand and submits the PO, but not with a tentative delivery plan. After finalizing a detailed plan, you can issue a release against the same PO with an accurate delivery schedule.

iii) Blanket purchase order

A collection of multiple purchase orders constitutes a blanket purchase order. This PO template is commonly used when different types of items are to be purchased in large numbers. Several POs are merged together to negotiate with the suppliers for a better price or discounts citing bulk purchase quantities.

Here, item details and quantities are only mentioned in the purchase order initially without prices. After the confirmation of the revised price or discount, a release against the same PO should be done with the agreed price, quantities, and delivery terms.

iv) Contract purchase order

A contract purchase order acts like a binding contract or document only containing the agreed terms and conditions of a purchase. The details of items, quantities, and the price will be discussed later.

Any future POs raised will be referred to the contract purchase order. This type of purchase order ensures maximum legal protection for parties involved and ensures long-lasting business relationships.

v) Digital purchase order

In this digital era, digitizing your purchase order enables you to customize the PO template as per needs and fetch the data whenever required. Easy methods to create digital purchase orders are through Excel or other spreadsheets.

Switching from traditional to digital purchase orders improves transparency, increases accuracy, reduces errors, and saves money on printing. Going a step ahead, automating your purchases will save time, optimize resources, and increase productivity in your business.

What factors make a good PO template?

While designing a purchase order template or PO template, make a note of the below things:

Simplicity in layout

Keep the template design simple and clear. Select a font that's easy to read with minimal colors. Group related fields and organize them together. Leave sufficient space for each field based on the data to be entered, and space between the fields to avoid cluttering the page. Use standard terminologies to avoid confusion.

User-friendliness

A good PO template should be user-friendly for anyone to fill out easily without any training. Add only relevant fields and maintain a hierarchy in the field structure. Ensure proper column arrangement and positioning so the PO template is easy to understand and use.

Flexibility in design

One size cannot fit all since every business operation is different. Flexibility to make changes in the template and customize the layout as per business needs is a must while considering a PO template so you can review it periodically and make relevant changes for your evolving business needs.

Include necessary information

Purchase order templates should include all necessary fields such as supplier details with GST, item details and description, purchase order number, quantities with UOMs, price and taxes, shipping and delivery instructions, and terms and conditions.

Authenticity

A reputable PO template should contain the business name of the buyer, business logo, and authorized signature in print format, thus assuring a sense of authenticity and trust during the purchase transaction.

What information does a PO template contain?

A well-designed purchase order template should include the following information.

Buyer information: Clearly specify the buyer's (your) business name, business logo, GSTIN, communication address, postal code, contact information, and purchaser name.

Seller information: Make sure to include details about the supplier like the supplier (seller) name, supplier code, supplier address, and supplier's GSTIN (if applicable). Include the supplier's contact number and email address for easy communication.

Item information: Add the name of the product or service to be purchased, the item/SKU code, its description, technical specifications, and HSN code to get a comprehensive understanding about the products.

Order information: Include the unique purchase order (PO) number, PO date, and request number (if any) for easy purchase tracking. Specify purchase quantities for each item, unit of measure (UOM), and conversion quantity to account purchases effectively.

Price information: Mention the unit price for each item, item or order specific discounts, net amount of products purchased, credits, and the grand total value.

Tax information: Add details about relevant taxes applicable for each product or service, tax percentage, and tax amount clearly for accurate accounting.

Shipping information: Add shipping information such as the ship-to address, expected delivery date, shipping information, shipment method, and shipping charges.

Payment information: Include payment related details such as agreed payment breakup, last date for payment, and payment method.

Terms and conditions: Remember to add important terms and conditions related to payment, packing, shipping, delivery, quality, service, legal, and tax conditions.

Footer content: Add placeholders for an authorized signatory to verify and sign the purchase order, with a seal and the date. Specify important points to be communicated in the footer notes, if required.

Having a transparent and error-free purchase order template with the above information acts as legal protection for both the buyer and seller, and helps find common solutions in case of any misunderstandings.