A common train of thought for many business owners is, “if I can handle it, why bother changing it?” This is definitely the case when it comes to purchase orders, even if you have a perfect track record with your suppliers. But what works now may not necessarily work down the road, or even in the near future.
What happens when you scale up your business and more employees are responsible for purchase orders? What if there’s a dispute over an order? What if an order is duplicated because of a lack of documentation? These are all problems a purchase order system can solve—essentially, purchase orders can save you a lot of trouble. Here’s how.
7 Reasons Why Purchase Orders Are Important
7 Reasons Purchase Orders Are Important
Businesses are often satisfied with verbal commitments or email threads when making orders. However, there are more to purchase orders than the order itself. Here are 7 ways POs improve your business.
They Help you Avoid Duplicate Orders
If one person in your company is in charge of making purchases, keeping track of orders may be easy. But as you scale up, purchase orders can keep track of what’s ordered, by whom and when.
They’re Required for Some Financial Audits
Certain financial audits require evidence that managers approved your company’s purchasing decisions. Purchase orders are the ideal documents for these audits.
They Can Help You Avoid Surprise Price Increases
If a supplier changes prices between the date of order and date of delivery or invoice, a purchase order clarifies the agreed upon price for both parties and clears up potential miscommunication.
They Help You Keep Track of Incoming Orders
It may seem obvious, but having a well-organized purchase order system makes it easy to identify what products are coming in at any time, making inventory and shipping management simpler.
They Help Keep Your Invoices in Check
When making repeat orders of identical or similar products, matching invoices to orders can be tedious without documentation. Including a purchase order number on the invoice avoids this confusion.
They Ensure Clear Communication
At the core, purchase orders clearly communicate all the details of a purchase. By having every detail clarified, laid out and documented, you avoid potential conflict or confusion in the future.
They’re Legal Documentation
If there are ever any disputes over what was ordered, or the agreed upon price, purchase orders serve as legal documentation that can be enforced. Best of all, they protect both parties.