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Purchase Order Format

A Purchase Order or PO is a formal document between the buyer and seller and contains the list of items to be delivered. It is typically sent by the buyer to order items and contains the details of the product quantity, agreed price, delivery date and other terms. 

Creating a purchase order starts with a potential buyer identifying a vendor who sells goods or services. Once the seller is shortlisted, the buyer lists out the type of product, quantity, and when it’s required. Next, the buyer drafts a purchase order with all the information and sends it to the vendor for approval. Once the seller receives the PO, he checks the product’s availability and approves or rejects it based on whether or not he can fulfil the order. 

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If the seller approves the request, he must deliver the goods as agreed upon. The seller sends an invoice with the amount indicated on the PO. It contains the information of the products, quantity, price, etc. Then, the buyer has to make the payment as per the payment terms mentioned on the purchase order.

This is how a typical purchase order works. Let’s also know the essential components of a purchase order, how to create it in word, excel, and PDF and about the online tools that help generate purchase orders in quite less time. 

Free Purchase Order Format Online

Main Elements of a Purchase Order

Every business follows a unique format of the purchase order. Some might create purchase orders on their own using available tools like Word, Excel, or PDF, and some use online software to generate one. No matter what kind of tool businesses use, the main elements of the purchase order should be included. Here is the list of the aspects that need to be included in the purchase order. 

  • Billing Address
  • Shipping Address
  • Vendor/Seller information
  • Voucher details
    • Voucher number
    • Date
    • Mode of payment
    • Supplier’s ref no/order number
    • Mode of delivery
    • Destination
    • Delivery terms
  • Order Details
    • Product details
    • Quantity
    • Price
    • Total amount (including taxes)
    • Due date of delivery
  • Payment Terms and Conditions
  • Other details
purchase order format

Purchase Order Format in Word

  • Open MS Word, click ‘File > New Document’
  • Click on ‘Insert > Header’
  • Choose the Header format, which allows you to insert the purchase order heading (on the left) and the business logo (on the right). 
  • In the next line of the header, add Date (on the right), Order number (in the centre), and company name and contact details (on the left).
  • Right below the header field, on the right side, insert customer name and contact details under the header – ‘Invoice To’ 
  • Next comes the purchase details fields. Based on your business requirement, include fields like product description, quantity, unit price, discount, total price, etc. You can also use a table to represent this data. 
  • Leave multiple fields empty to enable data entry. 
  • Below the table, to the right, include fields for sub-total, tax, discount, and total amount. 

Purchase Order Format in Excel

  • Open Microsoft Excel.  Select ‘File > New >Blank WorkBook’ 
  • Remove the gridlines by clicking on the ‘View’ tab and then unchecking ‘Gridlines’ in the ‘Show’ section.
  • Click on the ‘Header & Footer’ tab and give the header for the sheet as ‘Purchase Order’.
  • In the next cell, enter your company details, including company name, address, email ID and GSTIN. 
  • Create ‘Shipping To’ field to enter customer details like name, company name, address, email ID, and GSTIN/UN in the next cell. 
  • To its right, create fields like Purchase Order No., Date, Due Date, Terms, etc. 
  • Create the ‘Goods or services’ section to enter data, including name of the product/service, quantity, tax rate, discount, unit, total amount, etc., as per your business requirement.  
  • At the bottom of the page, provide your bank details and other payment modes like UPI bar code, UPI ID, or UPI phone number. 

You can also insert some excel formulas to auto-populate the cells when creating purchase orders. For instance, the ‘Date field’ can be auto-filled with the current day’s date using the formula =TODAY(). 

Purchase Order Format in PDF

Both purchase order format in Word and purchase order format in Excel can be downloaded in PDF form. If you want to create everything from scratch in the PDF itself, you can simply copy and paste the details from the purchase order format in word to the PDF and save it. Whenever you would like to send a purchase order, you can simply make a copy of the PDF format, fill it and send it to the buyer.

Tips To Create An Effective Purchase Order

  • Always include the buyer details like the name, address, contact details, and the company logo.
  • Space should be provided only to mention the delivery address. This is necessary to avoid any confusion between the delivery address and the company address. Also, the delivery address must be highlighted.
  • To showcase the legal entity, the format of the purchase order must include the details of business authorisation or other information. 
  • It is recommended to include the payment criteria apart from the terms and conditions. In case the payment methods are agreed upon previously, then make sure to enter that in black and white.
  • Just like the payment terms, the buyer can also add information regarding the terms of delivery in the purchase order.
  • To achieve the goal of the business, the buyer can specify particular clauses that state the acceptance and return of the products.

Benefits of Using Purchase Orders

Regardless of the size of the organisation, purchase orders are used for several reasons in the purchasing department. Here are some of the reasons that state the need for a purchase order in a business.

1. Purchase orders set a clear expectation

A purchase order helps clarify the vendors’ needs, and both sellers and buyers can use PO when the orders are not delivered as anticipated.

2. Track & manage orders

This is official documentation that gives the details of income or pending deliveries to the procurements, finance, and operation teams.

3. Helps in budgeting

When a PO is generated, the purchasers can factor these costs into company budgets and can spend the money more wisely.

4. Legally binding document

The PO can serve as a legally binding document without a formal contract after the vendor accepts the order. This document will serve as legal protection for both vendor and the buyer.

5. Purchase orders are an essential part of audit trails

When an audit happens in the company, the auditors will look for any financial discrepancies. But when the company issues, processes, and records the purchase orders, it helps in ensuring that the company has enough documents to submit to the auditors.

6. Increases the speed of the PO process

Generating a purchase order manually will take a lot of time and effort. It can also create errors in the information written in the PO, resulting in extra work and pressure for the whole team. However, if myBillBook is used, then creating a purchase order can be done by anyone within a few minutes.

7. Enhances Productivity

When the purchase order is made quickly without any mistakes using the PO app, it helps in enhancing the productivity of the entire team. In addition, since all the purchase order details are available in myBillBook, it helps the accounts departments record the transaction details quickly. Thus, the company can increase the cash flow and achieve early payment discounts.

8. Saves Money and Time

By using myBillBook, every business can reduce labour costs since an employee does not waste a lot of time making a purchase order. Also, recording the details in the book of accounts becomes quicker. Hence the employees can work more efficiently in less time, resulting in saving a lot of time and money.

9. Tracks all activities in real-time

If the purchase orders are created on paper, it becomes very difficult to track the details whenever you want. But if you are using myBillBook, you can check the details and track the order whenever you need it. Besides, all the activities currently happening can be monitored simultaneously using the app.

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