A purchase order is a document that a buyer sends to a seller to request merchandise.
A purchase order or order note is a document that a buyer gives to a seller to request certain merchandise . It details the quantity to be purchased, the type of product, the price, payment conditions and other important information for the commercial operation.
For example: "Juana, take Martínez's purchase order and prepare the order that will be picked up in an hour" , "A purchase order has just arrived for a value of $5,000" , "I don't understand what happened: in the company tells me that they never received the purchase order .
Characteristics of a purchase order
Generally, the purchase order mentions the place and date of issue, the name and address of the buyer and the seller, tax information, details of the goods ordered and payment and delivery conditions. It is important to clarify that said document is not valid as an invoice .
The purchase order has at least one duplicate , since the original is delivered to the seller while the buyer keeps the duplicate. In this way, both have proof of the operation that will be carried out: the buyer, to demonstrate what merchandise he has requested; the seller, to prepare the order and start the billing process.
It can be said, in short, that the purchase order is a written request for certain products at an agreed price and with certain payment and delivery conditions. This is an authorization that the buyer grants to be presented with an invoice for the purchase of the goods.
The purchase order includes important information for the completion of the commercial operation.
Advantages of those of open type
An open purchase order is known as one whose validity lasts until its issuer expressly cancels it. It is worth mentioning that this can also occur for certain specific reasons, such as the asset involved ceasing to exist, or its market price having exceeded a limit established at the beginning of the agreement. Using an open purchase order presents several advantages to businesses, some of which are explained below:
* First, the purchase order makes it much easier for employees to calculate appropriate inventory levels, as well as helping them more accurately detect when it is necessary to place a new order for supplies. On the buyer's side, it allows more efficient cost control through the use of savings measures, such as just-in-time inventory;
* Suppliers can know if competitors have equal opportunities in a business thanks to bidding. It is important to remember that the greater the competition , the more convenient the prices will be for the buyer. Furthermore, this opens the doors for him to influence negotiations more strongly, to obtain more favorable contracts for him;
* since the prices of an open purchase order remain stable for a certain period of time, it serves to combat potential inflation;
* One of the fundamental points is the certainty that this type of order provides to suppliers and buyers about the cost of the services and goods involved. There are a series of guarantees regarding price, quantity, payment conditions and delivery requirements that generate peace of mind for both parties;
* gives suppliers the security that they will earn a certain income periodically;
* When the order is of considerable size and the buyer is a major company , the seller can use blanket purchase orders to create a line of credit ;
* Reduces the time needed to place orders, since the purchasing process is encoded in the open order, allowing buyers to use that time for other issues.