1. Purchase Order Number and Date
Every purchase order (PO) must have a unique PO number for tracking and reference. Include:
- PO Number (e.g., PO-2025-001)
- PO Date (date of issue)
- Expected delivery date (if applicable)
This helps both parties manage invoices and deliveries effectively.
2. Buyer and Supplier Information
Clearly state both parties’ details:
- Buyer: Your business name, address, contact person
- Supplier: Vendor name, address, VAT number, contact info
This avoids confusion and ensures the right entities are referenced in documentation and billing.
3. Item Description and Quantity
List each item being ordered with full specifications:
- Item name or product code
- Description (size, model, color, etc.)
- Quantity requested
- Unit of measurement (e.g., pcs, boxes, litres)
Precision here prevents order errors and disputes.
4. Unit Price and Total Cost
Provide the agreed cost details per item:
- Unit price (before VAT)
- Total per line (unit price × quantity)
- Subtotal for all items
This allows for accurate cost tracking and validation.
5. VAT and Grand Total
Apply VAT if required and calculate the full total:
- VAT rate (e.g., 20%)
- VAT amount
- Grand Total (including VAT)
Include your business VAT registration number for compliance and invoicing purposes.
6. Payment Terms and Method
State the agreed payment conditions:
- Payment due (e.g., 30 days from invoice)
- Accepted payment methods (e.g., bank transfer, credit card)
- Bank details or payment instructions
This ensures prompt and accurate payment processing.
7. Delivery Details and Instructions
Include where and how the order should be delivered:
- Delivery address
- Special instructions (e.g., delivery time, unloading info)
- Contact person at delivery location
Also note if shipping costs are included or billed separately.
Frequently Asked Questions
What is a purchase order format?
It’s the structured layout used to create and communicate a formal order from a buyer to a supplier.
Is a purchase order legally binding?
Yes. Once accepted by the supplier, it becomes a legally binding document outlining the agreed terms.
Do I need to include my company logo on a PO?
While optional, including your logo adds professionalism and helps with branding and recognition.
Can I create a purchase order in Excel or Word?
Yes. Many businesses use templates in Excel or Word. You can also use accounting software like Xero or QuickBooks.
Should I keep copies of all purchase orders?
Absolutely. Retain digital or physical copies for accounting, audits, and record-keeping.
Is a purchase order the same as an invoice?
No. A PO is sent before goods/services are received. An invoice is issued by the seller for payment after fulfilment.
Conclusion
Using a proper purchase order format enhances clarity, accountability, and professionalism in your transactions. By clearly specifying items, pricing, and terms, both buyers and suppliers stay aligned, reducing errors and improving trust in business relationships.