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Download purchase order template in Microsoft Excel format.
Overview of a Purchase Order Form
A purchase order form is among the most common forms in trade and commerce throughout the globe. For a sales transaction to be legally valid and commercially accepted, it has to follow a set sequence of procedures. The vendor makes an offer or provides a quote, the buyer accepts the quote/offer and places a purchase order. After supplying the goods, the vendor raises a commercial invoice and the buyer effects payment as per agreed terms.
A purchase order form once signed and issued to the vendor with appropriate contents forms the basis of a legal contract between the vendor and the buyer. The content of a purchase order form is broadly uniform and can involve some additional information when cross border transactions are involved. The buyer may also opt to include some information in the purchase order to facilitate easy execution and providing adequate clarity.
The minimum content of a purchase order form are – The purchase order number which is critical for accounting purposes and the vendor getting paid, the address to which the goods are to be shipped to afford adequate clarity on where the goods ordered should reach. Notice that the purchase order can emanate from a different location and the delivery may be required at another place. Billing address – billing address is generally the address from which the purchase order emanates though the buyer is at liberty to designate another office for the purpose of billing. Full description of goods ordered – where specification number, drawings or such other details are involved, these details should be carried on the purchase order. And finally, the unit price of every item, cost of each item and the total value of the purchase order.
In addition to the above information, some buyers will also stipulate a date by which the order is to be executed or provide a delivery schedule in case a large order is involved. The delivery date or delivery schedule is important from a contractual as well as legal angle. Law of contracts in most countries permits the buyer to reject delayed deliveries unless there has been a suitable amendment before the shipment commences.
Some people hold the view that a formal purchase order form is useful only for large businesses. The fact however remains that any business can use a purchase order in the course of their normal business irrespective of whether the order is for a single item or multiple items. Contractual obligations under a purchase order are also not diminished by the value of the order. However, a purchase order can be deemed void when the buyer seeks delivery of goods that are legally prohibited or issued without the backing of an offer from the vendor. Most vendors also issue a written confirmation for every purchase order they receive in the normal course of business.