Skip to main content

Purchase Order Management

Purchase Orders (POs) in SimpleBillBook allow you to formally request goods or services from vendors before actual purchase. This helps in planning, budgeting, and ensuring proper documentation of procurement requests.

Overview of Purchase Orders​

Purchase Orders serve as formal agreements between your business and vendors, specifying:

  • What products/services you need
  • Quantities and prices
  • Delivery dates and terms
  • Payment conditions

Viewing Purchase Orders​

To view all purchase orders:

  1. Navigate to Manage Purchase → Purchase Order from the main sidebar
  2. You'll see a table listing all purchase orders with their current status

Purchase Orders List Figure 1: Purchase orders list showing all POs with status and details

Purchase Order Table Columns:​

Order Information:

  • Purchase Order: Unique PO number (e.g., PO1000)
  • Order Date: Date when PO was created
  • Vendor: Vendor name
  • Qty: Total quantity of items ordered

Financial and Delivery Details:

  • Total: Total order value
  • Delivery Date: Expected delivery date
  • Created By: User who created the PO
  • Status: Current status (Draft, Sent, Approved, Received, Cancelled)

Key Actions Available:​

  • Create Purchase Order: Start a new PO
  • Settings: Configure PO numbering and terms
  • Type to search: Filter/search existing POs
  • Edit/View: Click on any PO to edit or view details

Creating a New Purchase Order​

Step 1: Access PO Creation​

Click Create Purchase Order from the POs list page.

Step 2: Fill Purchase Order Details​

New Purchase Order Form Figure 2: Form for creating new purchase orders

Header Information:

  • Vendor*: Select vendor from dropdown (required)
  • Purchase Order Date: Auto-filled with current date (editable)
  • Delivery Date: Expected delivery date from vendor
  • PO Number: Auto-generated based on settings (e.g., PO 1000)
  • Status: Defaults to "Draft" (can be changed to "Sent" or "Approved")

Item Selection:

  1. Click + Add Item to add products to the order
  2. Select Product from dropdown
  3. Enter quantity, unit price, and any item-specific notes
  4. Add multiple items as needed

Financial Summary:

  • Subtotal: Sum of all item values before tax
  • Tax Amount: Calculated tax based on tax settings
  • Total: Final amount including taxes

Step 3: Save Purchase Order​

  • Save as Draft: Save for later editing
  • Send to Vendor: Mark as sent and optionally email to vendor
  • Approve: Mark as approved for processing

Purchase Order Settings​

Accessing PO Settings​

From the purchase orders page, click Settings to configure PO defaults.

Purchase Order Settings Figure 3: Configuration settings for purchase orders

Configurable Settings:​

Numbering System:

  • Purchase Order Prefix: Custom prefix (default: "PO")
  • Start Number*: Beginning sequence number (required)
  • Last Used Number: System tracks last generated number
  • Next Purchase Order Number: Preview of next auto-generated number

Terms and Conditions:

  • Default Terms: Enter standard terms (one per line)
  • Payment Terms: Default payment conditions
  • Delivery Terms: Standard delivery expectations

Other Settings:

  • Default Status: Initial status for new POs
  • Email Templates: Configure automatic email notifications
  • Approval Workflow: Set up approval requirements

Saving Settings:​

  • Click Save Settings to apply changes
  • Use Cancel to discard modifications
  • Settings affect all future purchase orders

Purchase Order Workflow​

Typical PO Lifecycle:​

1. Draft Stage (Status: Draft)​

  • PO created but not yet finalized
  • Can be edited and modified
  • Not visible to vendor

2. Approval Stage (Status: Sent/Approved)​

  • Sent to vendor for quotation/confirmation
  • May require internal approvals
  • Vendor may accept or propose changes

3. Processing Stage (Status: Processing)​

  • Vendor acknowledges and processes order
  • Items prepared for shipment
  • Delivery scheduled

4. Delivery Stage (Status: Partially Received/Received)​

  • Goods received from vendor
  • Quantity verification performed
  • Quality checks conducted

5. Completion Stage (Status: Completed/Closed)​

  • All items received and accepted
  • Converted to Purchase Entry
  • Ready for payment processing

6. Cancellation (Status: Cancelled)​

  • Order cancelled before fulfillment
  • Reasons documented
  • Vendor notified

Best Practices for Purchase Order Management​

Creating Effective POs:​

  1. Clear Descriptions: Use specific product names and codes
  2. Accurate Quantities: Double-check order quantities
  3. Realistic Dates: Set achievable delivery timelines
  4. Complete Information: Include all necessary vendor details
  5. Terms Clarity: Specify payment and delivery terms explicitly

Vendor Communication:​

  1. Send Promptly: Send POs to vendors as soon as approved
  2. Confirm Receipt: Verify vendor received the PO
  3. Track Responses: Monitor vendor acknowledgments and quotes
  4. Update Status: Keep PO status current throughout process

Internal Coordination:​

  1. Budget Alignment: Ensure POs fit within budget constraints
  2. Department Approval: Follow internal approval workflows
  3. Inventory Planning: Coordinate with inventory team for expected deliveries
  4. Receiving Preparation: Prepare receiving department for expected shipments

Converting PO to Purchase Entry​

When Items are Received:​

  1. Locate the PO in the list
  2. Click "Receive Items" or similar action
  3. Verify received quantities against PO
  4. System auto-creates Purchase Entry
  5. PO status updates to "Received" or "Completed"

Partial Receipts:​

  1. Record actual received quantities
  2. System creates Purchase Entry for received items only
  3. PO shows remaining balance
  4. Update PO when remaining items arrive

Common Scenarios and Solutions​

Scenario 1: Price Changes After PO Sent​

Solution:

  1. Communicate with vendor for updated pricing
  2. Create new PO if significant changes
  3. Or create Purchase Entry with adjusted prices
  4. Document reasons for changes

Scenario 2: Vendor Cannot Deliver on Time​

Solution:

  1. Update PO with new delivery date
  2. Consider partial shipments if possible
  3. Evaluate alternative vendors for urgent needs
  4. Document delays for vendor performance tracking

Scenario 3: Items Not as Specified​

Solution:

  1. Do not accept non-conforming items
  2. Return to vendor with explanation
  3. Update PO to reflect actual received items
  4. Request replacement or credit

Scenario 4: Multiple Shipments for One PO​

Solution:

  1. Receive each shipment as it arrives
  2. System tracks partial receipts
  3. PO shows cumulative received quantities
  4. Finalize when all items received

Integration with Other Modules​

Vendor Management:​

  • PO History: Tracks all POs with each vendor
  • Performance Metrics: Analyzes vendor delivery reliability
  • Spending Analysis: Monitors purchasing patterns by vendor

Inventory Management:​

  • Expected Stock: POs show future inventory additions
  • Reorder Planning: Helps plan for stock replenishment
  • Budget Forecasting: Aids in inventory budget planning

Financial Planning:​

  • Commitment Tracking: POs represent future financial commitments
  • Cash Flow Projection: Helps forecast future payments
  • Budget Control: Monitors actual vs. planned purchases

Purchase Management:​

  • Seamless Conversion: POs convert to Purchase Entries upon receipt
  • Document Trail: Maintains complete procurement history
  • Variance Analysis: Compares PO vs. actual purchase details

Reports and Analytics​

Available PO Reports:​

  1. Open POs Report: All POs not yet completed
  2. PO vs. Purchase Analysis: Compare ordered vs. received
  3. Vendor Performance: Delivery timeliness and accuracy
  4. Departmental Spending: POs by department or category
  5. Pending Approvals: POs awaiting authorization

Key Metrics to Monitor:​

  • PO Cycle Time: From creation to completion
  • Vendor Compliance: Adherence to PO terms
  • Budget Variance: PO value vs. actual purchase cost
  • Partial Delivery Rate: Frequency of split shipments