The standard purchase order (PO) is usually used for infrequent buyer requests. It’s not usually an item that a shop or an individual needs all the time. It’s not that consistent. A PO typically includes the listing, quantity, price, and the delivery date and location of an item.
A standard purchase order is often used for times when an office worker needs to only order a small number of office supplies. For instance, they may want sticky notes or paper clips. They might need approval for this order, or perhaps for receipt papers and other office supplies, and they want to order but need approval from management.
A planned purchase order (PPO) typically states all details about an order except the date and location of delivery. The quantity and name of the item, along with prices, are usually shown on a PPO.
A PPO usually occurs when a company regularly orders a set amount of items. However, they might still want to confirm they need those items before following through with that purchase. It’s more about “when” the order will be delivered than “if” the order is delivered.
Also known as a standing order, a blanket purchase order (BPO) doesn’t show the quantity of items in a purchase order. Sometimes, the price is also hidden. The only detail you will usually see is the item name.
The agreement worked out between the buyer and seller is also on a blanket purchase order. This purchase order type suits businesses that regularly order the same items week after week. One BPO purchase order example is a cleaning company routinely ordering the same janitorial supplies, but the amount varies.
A contract purchase order is usually used to establish a legally binding agreement between a buyer and a seller. It doesn’t usually show the item orders or their quantity. It also usually doesn’t show the price of the items requested by the buyer.
A consumer would typically want a contract purchase order. They might want their personal information kept private. However, they want the people in the shipping and receiving department to know what they ordered. A business may also want it this way as well when ordering confidential, classified supplies.
Purchase order tips
For buyers, it's always important to ensure the utmost accuracy when filling out a purchase order. Otherwise, this can delay shipment if you look at a copy of your order and find out it’s wrong. You also still have to at least pay for the items you did receive because it is a binding agreement.
For sellers, specify the payment terms honestly to a buyer. Don’t make them pay for what they didn’t order. However, you also can make sure you solidify an agreement with the buyer that states that the buyer is at least responsible for the parts of the ecommerce orders that were fulfilled.
Both buyers and sellers also should consider automating as much of the order process as possible. This will prevent costly mistakes and failed fulfillment.
For instance, both buyers and sellers can create automated order notifications. It's also possible to set up ecommerce solutions that allow both buyers and sellers, whether wholesale or retail, to manage and view the orders they place and receive.
In some cases, it's even recommended that you have an attorney to help you understand the terms of a purchase order. This could save you if you don't realize that a seller has made it difficult for you to understand the terms of your agreement.
For instance, vendors might fail to tell you that you don't have any right to cancel a binding order, but they do. Watch out and protect yourself. Vendors have rights too. They have the right to cancel orders they can't fulfill, whether the buyer wants to cancel the order or not.
Creating your purchase order system
There's no easy way to create your purchase order system, but automation can smooth out the process. However, you shouldn't use just any software for this purpose.
You must make sure you trust your software purchase order. Learn more about how you can safely and securely process all your B2B and B2C orders today.