Using purchase orders to grow your business isn’t as hard as you think, and it opens the doors to many other opportunities, such as last-minute orders or contracts from your own customers. If you’re a frequent customer and buy a lot of supplies in bulk, you may qualify for special pricing or other incentives. Maintain a good relationship with your vendors, and don’t be afraid to negotiate.Your vendor will withdraw funds as payment for the shipped merchandise, and you’ll get more supplies to work with that you’ll pay back later. The financing company will assign you a line of credit that’s essentially an inventory loan. Some businesses will secure your purchase orders through your own creditworthiness, while others will use a financing company.Typical time periods are net 30 days and net 60 days. Find out how long you are allowed to take to pay the invoice generated from the purchase order.Find out which of your vendors take orders via purchase order and any restrictions they have.Every purchase order you send must reflect the price you have agreed on for the quantity you plan on ordering. Make sure your vendor gives you product numbers and information on quantity discounts.After a while, it will seem like a second nature to fill out these forms. Decide on a standard purchase order form template and make sure you use it in every transaction.Although they may not have the working capital to make the purchases outright, a business owner can “order against” an anticipated large payment. Sometimes, a business will use purchase order financing to help secure a big project. When you use purchase order financing, you’ll be able to retain working capital while getting the supplies you need. You should have at least two signatories in case one person is absent the day an urgent purchase order needs to be sent. Sure, you want managers and salespeople to be able to place orders, but you’ll want a trusted person from upper management to review each purchase order. Make sure that you limit who can sign off on a purchase order. With standard prices, you’ll immediately know if you’re being overcharged, and with a good purchase order template, you’ll always have the information you need, for every order with your vendor. Work with your vendors to develop unit prices for the items or services you order regularly – this will save your business relationship in many cases. (You can order this type of stamp from an office supply store.) If you choose to fax your purchase over to your vendor, make sure that you send a hard copy in the mail, stamped “DUPLICATE” in red letters. Make sure you make multiple copies one for your own records, one for the vendor, and one for the accounting office. When you write a purchase order, you get to add your own “fine print.” If you pay invoices net 30 or 60 days, you will want this clearly listed on your purchase order form template. Tips and Tricks for Purchase Order Success A purchase order form template will help keep things standardized, no matter how many employees your company has. Make sure you keep your accounting records up-to-date and always make sure your order forms are legible, properly formatted, and authorized by the responsible party, such as the business owner or the procurement office. If the retailer uses only his cash flow for this purpose, he would only be able to order a limited supply of goods, and would risk missing out on profits before the shopping season ends. Remember, a purchase order, once accepted by the vendor, is considered a legal contract that you are guaranteeing payment for.įor example, a retailer who expects a particularly busy Xmas season may place an extra large order to keep up with the anticipated demand. Many companies using purchase order forms to order goods on credit. For many business owners, this is a vital function that helps grow the business. Retailers, construction firms, ad agencies and other vendors typically accept purchase orders from companies they believe are credit-worthy typically, this means you are considered a good customer who pays on time.Ī purchase order is set up to allow you to keep the same cash flow until the invoice is due. A purchase order template, unlike an order form template, is only used in the business-to-business marketplace. Many vendors will accept purchase orders of net 30 or net 60 days, giving you time to recoup the money you’ve spent while working to grow your business. Many businesses rely on purchase order financing to help them buy larger quantities of goods and supplies without harming their cash flow. Using a Purchase Order Template for Financing Purposes