Creating Purchase Orders

Learn how to create accurate, complete purchase orders that ensure smooth procurement and delivery.

Before You Start

What You Need

• Supplier is set up in system
• Items exist in inventory master (or will create as non-stock)
• Quotation from supplier
• Budget approval (if required)
• Delivery address confirmed
• Your user account has PO creation permission

Estimated Time

• Simple PO (1-3 items, known supplier): 5-10 minutes
• Complex PO (multiple items, new supplier): 15-30 minutes

Step-by-Step Instructions

Step 1: Navigate to PO Creation

Path: [Purchasing > Purchase Orders > New PO]

Or: Use quick create button (+ icon) > “Purchase Order”

Step 2: Fill PO Header

Required Fields

Supplier Information:

• Supplier: Start typing supplier name, select from dropdown
  • If supplier not found: Create supplier first via Master Data > Suppliers
• Supplier Contact: Select contact person (usually auto-filled)
• Currency: Auto-filled from supplier master, change if needed

Document Information:

• PO Number: Usually auto-generated (leave blank for auto)
  • Manual entry: Only if required by your process
• PO Date: Defaults to today (change if backdating authorized)
• Required Date: When you need the goods delivered
  • Tip: Add buffer for supplier lead time + shipping

Delivery Details:

• Delivery Address: Your warehouse/receiving location
  • Click dropdown to select different location if needed
• Delivery Instructions: Special delivery requirements
  • Example: “Deliver to Loading Bay 2, after 2 PM”

Optional Fields

Terms and Conditions:

• Payment Terms: Auto-filled from supplier (e.g., Net 30)
• Delivery Terms: Incoterms (EXW, FOB, CIF, etc.)
• Freight Terms: Who pays shipping
• Tax Treatment: Standard, zero-rated, exempt

Reference Information:

• Your Reference: Internal reference (requisition number, project code)
• Buyer Name: Your name (usually auto-filled)
• Department: Your department
• Remarks: Any special notes for supplier

Step 3: Add Line Items

Click Add Line Item or Add Item button

For Inventory Items (Existing in System)

Item Selection:

1. Click in Item Code field
2. Start typing item code or description
3. Select from dropdown
4. Description and details auto-fill

Quantity and Pricing:

• Quantity: Enter quantity needed
• Unit of Measure: Auto-filled (EA, PC, KG, etc.)
  • Change if ordering in different UOM
• Unit Price: Enter price from quotation
• Currency: Inherited from header
• Discount %: If applicable
• Tax Code: Auto-filled based on item and supplier
  • Change if different treatment for this purchase

Additional Details:

• Required Date: Line-specific delivery date (if different from header)
• G/L Account: Expense or inventory account
  • For inventory items: Usually auto-filled
  • For expense items: Select appropriate account
• Cost Center: Department or cost center
• Project Code: If purchase for specific project
• Line Notes: Special instructions for this item

For Non-Stock Items (Services, One-time Purchases)

Item Entry:

1. Click Add Non-Stock Item or toggle item type
2. Description: Enter full description
   • Example: “Consulting services - system implementation”
3. Quantity: Enter quantity (often 1 for services)
4. Unit of Measure: Select appropriate (EA, HR, DAY, etc.)
5. Unit Price: Enter price
6. Tax Code: Select appropriate tax treatment
7. G/L Account: Select expense account
   • Professional Fees, Consulting, Repairs, etc.
8. Cost Center: Department
9. Project: If applicable

Price Fields: Invoice Price vs. Actual Cost

Why two price fields?

• Invoice Price: What appears on supplier’s invoice
• Actual Cost: Real cost after rebates and discounts

When they differ:

Example 1: Volume Rebate
Invoice Price: $100
Volume Rebate: -$5 (paid quarterly)
Actual Cost: $95

Example 2: Payment Discount
Invoice Price: $100
Early Payment Discount: -$2 (if paid within 10 days)
Actual Cost: $98 (if taking discount)

Example 3: Year-End Rebate
Invoice Price: $100
Year-End Rebate: -$3 (paid annually)
Actual Cost: $97

How to enter:

1. Always enter Invoice Price as supplier’s quoted price
2. Enter Actual Cost if you know rebates/discounts apply
3. If unsure, enter same value for both
4. Finance team will adjust later based on rebate agreements

Step 4: Attach Supporting Documents

Click Attachments tab or Add Document button

Required Documents

Supplier Quotation:

• Type: Select “Quotation”
• File: Select quotation file (PDF, Excel, image)
• Description: “Supplier quotation ref Q-20240315”
• This is CRITICAL for audit trail and variance resolution

Purchase Requisition (if applicable):

• Internal request document
• Approval emails
• Budget approval

Specifications (if applicable):

• Technical specifications
• Drawings or designs
• Quality requirements
• Test certifications required

How to Attach

Method 1: Drag and Drop

1. Open file location on your computer
2. Drag file to attachment area
3. Drop file
4. Add description
5. Click Upload

Method 2: Browse and Select

1. Click Add Document or Browse
2. Navigate to file location
3. Select file
4. Click Open
5. Add description
6. Click Upload

Method 3: Scan Directly (if scanner integrated)

1. Place document on scanner
2. Click Scan Document
3. Scanner captures
4. Add description
5. Click Upload

Step 5: Review PO Totals

Before submitting, verify totals:

Check:

• Subtotal: Sum of all line items before tax
• Discount: If any discount applied
• Tax Amount: Calculated based on tax codes
• Total: Final amount supplier will invoice

Verify:

• Subtotal matches your calculation
• Tax rate is correct (check quotation)
• Total matches supplier’s quote
• Currency is correct

If totals don’t match:

1. Check each line item price
2. Verify quantities
3. Check tax codes
4. Review discount entries
5. Compare to original quotation

Step 6: Save Draft (Optional)

If not ready to submit:

• Click Save as Draft
• PO saved but not submitted for approval
• Can edit later
• Status: Draft

When to use:

• Waiting for more information
• Need to verify details with supplier
• Gathering approvals offline
• End of workday, will complete tomorrow

Step 7: Submit for Approval

When ready:

1. Click Submit for Approval
2. System validates required fields
3. Fix any errors highlighted
4. Confirm submission

System checks:

• All required fields completed
• At least one line item
• Quotation attached (if required by policy)
• Budget available (if budget control enabled)
• Within your authorization limit

Approval routing:

• System routes based on PO value
• Approver receives notification
• You receive confirmation of submission
• Status changes to: Pending Approval

After Submission

Track Approval Status

Navigation: [Purchasing > Purchase Orders > My POs]

Status meanings:

• Pending Approval: With approver, awaiting decision
• Approved: Approved, ready to send to supplier
• Rejected: Rejected, see comments for reason
• On Hold: Temporarily held, pending information

If PO is Rejected

Actions:

1. Open rejected PO
2. Read approver’s comments
3. Fix issues identified
4. Make necessary changes
5. Resubmit for approval

Common rejection reasons:

• Price too high (get better quote)
• Wrong budget code
• Missing quotation
• Supplier not approved
• Over budget (get budget increase)
• Insufficient justification

If PO is Approved

Next steps:

1. Open approved PO
2. Review final version
3. Send to supplier (see next section)

Sending PO to Supplier

Electronic Transmission (Recommended)

Navigation: Open approved PO > Click Send to Supplier

Process:

1. System generates PDF of PO
2. Email auto-populated with supplier contact
3. Email template loads with standard message
4. Customize message if needed:

   Dear [Supplier],
   
   Please find attached our Purchase Order [PO-XXXX] for [items description].
   
   Required delivery date: [Date]
   Delivery address: [Address]
   
   Please confirm receipt and expected delivery date.
   
   Thank you.
5. Click Send
6. System records transmission date and time
7. PO status updates to: Sent to Supplier

Print and Fax/Mail

If supplier prefers paper:

Print:

1. Open approved PO
2. Click Print or Print Preview
3. Review print format
4. Print on company letterhead (if required)
5. Sign (if signature required by policy)

Transmit:

• Fax: Fax to supplier’s fax number
• Mail: Mail to supplier address
• Hand Deliver: Deliver in person if local

Record Transmission:

1. In PO screen, click Mark as Sent
2. Enter send date
3. Enter send method (Fax/Mail)
4. Add notes: “Faxed to 555-1234”
5. Save

Supplier Portal (If Available)

If supplier has portal access:

1. PO automatically appears in their portal
2. They receive notification
3. They can acknowledge receipt electronically
4. System updates status automatically

Following Up with Supplier

Get PO Confirmation

Within 24-48 hours, expect supplier to:

• Confirm receipt of PO
• Accept the order, or
• Raise questions/issues

If no response:

1. Day 2: Send follow-up email
2. Day 3: Call supplier
3. Day 4: Escalate to purchasing manager

Handle Supplier Response

Supplier Accepts PO

They confirm:

• PO received
• Order accepted
• Delivery date confirmed

Your action:

• Update expected delivery date in system (if different)
• Set reminder to follow up closer to delivery
• No further action until delivery

Supplier Raises Issues

Common issues:

Price Changed:

• Supplier: “Price is now $105, not $100”
• Your action: Verify if authorized, get approval, or negotiate

Delivery Date Not Possible:

• Supplier: “Can deliver March 30, not March 15”
• Your action: Check if acceptable, update PO, or find alternative

Item Discontinued:

• Supplier: “Item no longer available”
• Your action: Request alternative, or cancel PO and find new supplier

Minimum Order Not Met:

• Supplier: “Minimum order is 100, you ordered 50”
• Your action: Increase quantity, or accept higher per-unit price

Action for Issues:

1. Discuss with supplier
2. Negotiate resolution
3. If significant change: Get new approval
4. Update PO if needed
5. Re-send amended PO to supplier

Common Scenarios

Scenario 1: Regular Office Supplies Order

Situation: Monthly restocking from regular supplier

Details:

• Supplier: Office Supply Co. (existing)
• Items: 10 items, all in system
• Value: $850
• Quotation: Email price list

Steps:

1. Create new PO
2. Select supplier
3. Add 10 line items quickly (type item codes)
4. Prices auto-fill from price book
5. Attach email price list
6. Submit (auto-approved < $1,000)
7. Send to supplier
8. Done in 8 minutes

Scenario 2: Equipment Purchase (High Value)

Situation: New machine for production

Details:

• Supplier: XYZ Machinery Inc.
• Item: 1 machine (non-stock)
• Value: $45,000
• Quotation: Detailed proposal PDF

Steps:

1. Create new PO
2. Select supplier
3. Add non-stock item: “CNC Machine Model 2000”
4. Quantity: 1, Price: $45,000
5. G/L Account: Fixed Assets - Machinery
6. Cost Center: Production
7. Attach quotation (multi-page PDF)
8. Add notes: “Installation and training included”
9. Submit for approval
10. Requires CFO approval (>$25,000)
11. Follow up on approval status
12. Once approved, send to supplier
13. Get delivery schedule confirmation

Scenario 3: Import Purchase (Foreign Currency)

Situation: Raw materials from overseas

Details:

• Supplier: International Materials Co. (Singapore)
• Items: 3 items
• Value: SGD 28,000
• Terms: FOB Singapore, prepayment 50%

Steps:

1. Create new PO
2. Select supplier
3. Currency: SGD (auto-filled)
4. Exchange rate: System uses current rate
5. Add 3 line items in SGD
6. Delivery terms: FOB Singapore
7. Payment terms: 50% advance, 50% on B/L
8. Attach proforma invoice
9. Add notes: “Prepayment required, arrange LC”
10. Submit for approval
11. Send to supplier when approved
12. Coordinate with finance for LC arrangement

Tips for Efficiency

Speed Up PO Creation

Use Templates:

• Save frequent orders as templates
• Modify template instead of starting from scratch
• Update template periodically

Favorite Items:

• Mark frequently ordered items as favorites
• Quick access to common items
• Reduces search time

Copy Previous PO:

• Find similar previous PO
• Use “Copy PO” function
• Modify as needed
• Faster than creating from scratch

Keyboard Navigation:

• Learn tab order of fields
• Use enter/tab instead of mouse clicks
• Type-ahead search for suppliers/items
• Keyboard shortcuts for save, submit

Maintain Accuracy

Verification Checklist:

• Supplier name correct
• All items correctly described
• Quantities match requirement
• Prices match quotation
• Currency correct
• Delivery date realistic
• Delivery address correct
• G/L accounts correct
• Quotation attached
• Special instructions noted

Double-Check Critical Fields:

• Unit price: Most common error
• Quantity: Second most common
• Delivery date: Often unrealistic
• Currency: Easy to miss
• G/L account: Affects financial reporting

Troubleshooting

Error: “Supplier Not Found”

Cause: Supplier not in system Fix:

1. Search thoroughly (alternate names)
2. If truly not in system: Create supplier first
3. Navigation: Master Data > Suppliers > New Supplier
4. Return to PO creation after supplier created

Error: “Item Not Found”

Cause: Item code doesn’t exist Fix:

1. Verify item code with supplier
2. Search by description
3. If truly new item: Create item first (if policy) or use non-stock item

Error: “Budget Exceeded”

Cause: PO exceeds available budget Fix:

1. Check budget availability report
2. If budget is available: Check if coded to correct budget line
3. If truly over budget: Get budget increase approval
4. Attach budget approval to PO

Error: “Cannot Submit for Approval”

Cause: Validation failed Fix:

1. Read error message carefully
2. Check all required fields completed
3. Ensure at least one line item
4. Verify quotation attached (if required)
5. Fix highlighted errors
6. Try submit again

Best Practices

Do’s

• ✅ Always attach supplier quotation
• ✅ Set realistic delivery dates
• ✅ Include clear delivery instructions
• ✅ Use correct G/L accounts
• ✅ Review totals before submitting
• ✅ Follow up for supplier confirmation
• ✅ Update PO if terms change

Don’ts

• ❌ Create PO without quotation
• ❌ Rush through data entry
• ❌ Assume supplier will deliver by your date without confirmation
• ❌ Ignore currency differences
• ❌ Code all purchases to “General Purchases”
• ❌ Leave delivery address blank
• ❌ Submit for approval before reviewing

Related Documentation

Workflows

• Standard Procurement Workflow - Complete purchasing process
• Purchasing Overview - Daily task guide

Next Steps

• Goods Received Note Processing - Receiving deliveries
• Purchase Invoice Processing - Processing supplier invoices

Module Documentation

• Purchasing Module - All purchasing features
• Supplier Maintenance - Managing suppliers
• Inventory Items - Item master data