How To Create The PERFECT Purchase Order Template

By |2018-08-20T18:08:34+00:00August 21st, 2018|eCommerce Best Practices|

Are you running a small business and have plans to scale?

Do you want your business, regardless if its size, to be successful and continue to grow?

Are you wondering what process is missing in the grand scheme of things that can save your business money, your employees time, and yourself from the constant headaches of having to manage everything all at once?

If these are questions you ask yourself on a regular basis, it’s time to take a look at how a simple thing like purchase orders can make your life a whole lot easier.

Keep reading to find out what purchase orders are, why they are crucial to your business and your success, and how to create the perfect purchase order template.

Are you ready?

You should be. You have nothing to lose.

What are Purchase Orders?

To explain what a purchase order is in simple terms is easy:

They are legally binding documents that allow buyers to request items from a seller (supplier, vendor, etc.).

But the truth is, there’s a lot more to purchase orders than just that definition.

Not that they are complicated in any way.

They are still simple, and have the power to make your business run more efficiently than it ever has before.

It’s just, there’s a lot to them.

I guess that’s what makes them so great – and why you should start using them right now.

Purchases orders are documents that are drafted by people that want to buy stuff from their supplier, vendor, favorite company, whatever.

They contain a unique purchase order number (for organizational purposes), and a whole lot of other helpful information such as:

  • Your company details, including the logo, names of important people, business address, phone number (and other contact info.)
  • The date the purchase order was created
  • Who the order is being sent to and their information (e.g. the supplier’s name and contact info.)
  • The items to be purchased and all details (description, SKUs, quantity, unit measure, and price)
  • The expected delivery date and ship to address
  • Your billing address and payment terms (paid in full, payment plan, etc.)
  • Line totals, subtotals, discounts (percentages or flat rates), and grand totals

So, this is how it works.

You decide you want to buy a bunch of items from your favorite office supply vendor.

You then draft a purchase order, complete with all the information outlined above.

The purchase order is then sent off to your vendor for approval.

Your vendor will take a look at what you want to buy, clarify any details with you that need clarifying, and make sure they have the items you’ve requested in stock.

The vendor then gives you the okay and approves the purchase order.

A legally binding contract is then formed between the two parties – you and your vendor.

Your vendor will prepare your purchase order, clear any funds that you may have sent along with the purchase order, and ship the items your way, making sure to include the purchase order number on the packing slip so you know exactly what you’re receiving.

Soon enough, you receive your items, along with an invoice from your vendor outlining any funds that have been paid or are due.

You pay the remaining balance if there is one.

Everyone is happy.

Seems perfect right?

Well, it is. When it’s done right.

But before we get into how to create a purchase order template and integrate it into your current purchasing process, let’s take a deeper look at the benefits of using purchase orders.

You know, just in case you’re still not convinced.

Why in the World Are Purchase Orders a Good Thing?

You might be asking yourself why you would want to add yet another process to your already busy business schedule.

I mean, purchase orders are just another document you have to keep track of when it comes to buying stuff for your business.

Seems like a hassle right?

Not to mention, you’ve been working with the same suppliers for some time now, have a strong relationship, and can always rely on them.

And, you’ve never had any problems getting your supplies, materials, or services before.

So, why change a good thing?

Well, I’ll tell you why.

Because as your business continues to grow, payroll expands, customers demand more, and you find yourself making more purchases than ever before, there’s likely to be a breakdown in that good old handshake agreement at some point.

Protecting your business, and saving yourself time and money, should be your number one priority.

And if your relationships are as strong as you think they are, introducing this new way of doing business with suppliers should be a welcome thing.

After all, purchase orders protect suppliers too.

The thing is, people that boo hoo purchase orders are probably approaching the whole process in the wrong way.

Because when done the right way, purchase orders have the ability to streamline your purchasing process, save you tons of cash, and reduce errors on your part, the supplier’s part, and everywhere in between.

So here’s the deal, I’m going to rattle off a bunch of reasons why you need to be using purchase orders right now, and you can pick the reason you like most to convince yourself I’m right.

Sound good?

Okay, here are the top benefits purchase orders offer businesses (especially those that are continuing to grow):

 

  1. You can submit an order for items and guarantee to supplier has them for you, before making a payment if you want
  2. The legality behind the document ensures you’ll never lose your money on an order you’ve already paid for and the supplier has agreed to fulfill
  3. They give you a concrete document to reference in case anything goes wrong so blame can be applied appropriately (missing items, non-payment, failure to fulfill, wrong items, etc.)
  4. They give suppliers clear details about what you want to buy, how you want to pay, and where the items are supposed to go so there are never any questions
  5. Managing your business’ inventory (whether for customers or internal use) is way easier when you can reference past purchase orders
  6. Tracking employee spending, staying on budget, and saving money are more doable with a consistent process like the one that comes from using purchase orders
  7. Accuracy of orders is easier to achieve when your items come with a purchase order number on the packing slip
  8. You can reduce the amount if internal fraud (e.g. employees asking for money to buy an item that exceeds the item’s true cost and pocketing the rest)
  9. You have information at your fingertips so you can make data-driven decisions as your business continues to grow
  10. Automation of the entire process (using cool solutions like the ones offered by Skubana) makes your life easier and less stressful

So, what do you think?

Do you want to give this whole purchase order thing a try?

I thought so!

How NOT To Create The Perfect Purchase Order Template

It may seem weird to start off with how NOT to do something.

But trust me, when you start poking around about how to create a purchase order for your business, you’re going to run into a lot of information.

And most of it will only make your life harder.

Which probably explains why some people are so against the idea of using purchase orders.

But I digress.

When it comes to creating purchase order templates to use for your company, there are three methods you should avoid at all costs if your sanity is something you want to keep:

  1. Paper-based purchase order templates
  2. Templates created using Excel
  3. Templates created using Microsoft Word

Now, I’m not going to tell you it can’t be done using any one of those three methods.

But what I will tell you is that the cons far outweigh the pros for these methods, and that there is an easier, more automated way.

To start, paper-based purchase orders comes with a whole host of potential problems.

They require someone to manually create and customize the template depending on the supplier, which is tedious, time consuming, and costs your business money.

Paper documents take up a lot of room to store (for record keeping reasons), are hard to access easily in the case of discrepancies, can be lost/damaged/destroyed, and make tracking spending nearly impossible (unless you invest in more manpower to manually create some sort of spreadsheet to track spending on top of creating the purchase orders).

Not to mention, tracking the status of your purchase order through the supplier is not easily done.

In fact, it will probably involve someone making several phone calls to ensure it can be fulfilled and find out if it’s been sent out for delivery, which again will cost your company precious time and money.

Because of these issues, many people turn to Excel or Microsoft Word to create and manage their purchase orders.

And, while this can be easier than relying solely on a piece of paper printed from your computer, they still have too many issues to make them worthwhile.

For example, if you want to use Excel, you only have a few pre-made templates to choose from and you have to know how to use Excel formulas/worksheets/workbooks (and not knowing how to leaves room for human error which can harm your bottom line).

You also have to manually input all of your purchase order information every time a new order goes out, which no one wants to do.

So, you’ve decided not to use paper purchase orders, and Excel is too complicated.

That leaves you with using Microsoft Word right?

Well, there are definitely more pre-made purchase order templates to choose from in Word.

And, you can customize (and save) your templates so adding in things like your company information every single time you create a new purchase order is not necessary.

But again, you’ll have to manually input everything else, and track your inventory and spending elsewhere, which doesn’t save you time.

And depending on how reliable your tracking is, this doesn’t necessarily save you money either.

So, what are you supposed to do?

Well, I have just the solution – automated purchase order creation.

Interesting right? Let’s take a look.

Creating the Perfect Purchase Order Template

Before jumping into how to create the perfect purchase order template, it’s worth mentioning that reliable purchase orders start with reliable requisitions.

Not sure what a requisition is?

I’ve got you covered.

A requisition, in layman’s terms, is an official request to buy something.

These requests come from employees when they need things to do their jobs (such as office supplies) or the dedicated purchaser in your company who is in charge of buying supplies for you to create the products and services you sell to customers.

If you don’t have a streamlined way for people to make requests, and you start creating purchase orders randomly to fill your company’s needs, chances are you’re wasting time and definitely spending too much money.

So, before you create the purchase order template that will be used when people make requests, make sure to put into place a way for anyone in your company to request items.

By doing so you can:

  • Easily see what employees are buying to make sure everything is appropriate
  • Create a budget to help cut costs without sacrificing job performance or the customer experience
  • Track spending both internally and for your business to stay on track with your budget
  • Make requests easy to do by using one consistent process that everyone knows about
  • Identify spending patterns and put routine requests on auto-order
  • Get in on bulk or volume discounts when enough of one item is needed at a time

As you can see, by making it easy for people within your company to make requests for items, the purchase order process becomes very simple.

Plus, you save time and money, which all businesses welcome.

So, that brings us to how to create the perfect purchase order template for your business.

The first thing you’ll need to do is decide which purchase order software you want to use.

Remember, not all software is created equally, and not all software will perform the tasks you want it too, making your job harder.

And, if you choose a software that doesn’t do everything you want it to, you’ll have to invest in more software to help.

And before you know it, you could end up with tons of software all over the place performing multiple tasks and taking up all your time.

That’s why using Skubana is so beneficial, and not just for automating your purchase order creation.

In fact, Skubana is an all-in-one platform designed to eliminate the need for multiple pieces of software to run your business, automate repetitive tasks to save you time and money, and help your business scale bigger than you ever thought possible.

But for now, let’s just focus on how to create your purchase order template using Skubana’s built-in tools.

Step 1: Vendor Setup

The first thing you’ll need to do before creating a purchase order template (that can be used for all vendors you work with), is set up your vendors within the Skubana platform.

On the Setup Wizard, click the Vendors panel and then click Set Up.

Next, click Add Vendor and enter information such as the vendor’s name, complete address, and phone number.

Keep in mind, if you want to truly automate purchase orders for this particular vendor (because manually creating purchase orders using Skubana is possible too), you’ll need to include the vendor’s email address too.

When you get to the Services section, click the appropriate boxes indicating whether the vendor is a supplier, manufacturer, and/or dropshipper.

This helps you determine which type of vendor you are working with when you send a purchase order and can help keep records more organized.

If you aren’t sure what each term means, check out these helpful explanations:

  • Suppliers. Suppliers don’t produce any product, they simply deliver items you order.
  • Manufacturers. Manufacturers both produce and supply items you order.
  • Dropshippers. Dropshippers supply and fulfill (deliver) their products to your customers using your name.

Next, you’ll want to configure the following to make sure Skubana can process purchase orders seamlessly for you:

  • P.O. email, which is where Skubana will send auto-generated purchase orders
  • P.O Fax is a number where the auto-generated purchase order can be sent
  • P.O file format, which is the purchase order’s format (PDF, email, HTML attachment)

Lastly, enter the incoterm (which is usually DAP unless your vendor says otherwise), preferred payment method, and item tax.

Click Save.

Step 2: Create a Purchase Order

Once you’ve saved all your vendors, you are ready to create a purchase order.

Start by clicking POs in the Toolbar, and then New P.O.

From the Vendor dropdown menu, choose the vendor you are planning to order from.

Next, you’ll need to add the details of your purchase order:

  • On the New Purchase Order page, enter the purchase order details
  • In the PO Details section, choose one of your warehouses as the delivery destination, and enter a Confirm By date
  • The Communication section is great for leaving a personalized message to the vendor
  • On the Item section (near the bottom) select items to be covered in this purchase order, including the quantity and unit of measure
  • Click Add

Every time you add a new item to your purchase order, you’ll see the Aggregate Costs section update with a new total cost.

When all of your requested items have been added to the purchase order, enter the shipping cost, as well as any other related costs by clicking the Plus button.

A new cost automatically calculates for you every time you make a change.

When everything is filled out, you can expect your purchase order to look something like this:

Click Save & Authorize (if you are the one authorizing purchase orders) or Save (so the one in charge of authorizing purchase orders for your company can easily access and approve it)

Just make sure, if you want to auto-generate a specific purchase order for your company, you check out these step by step instructions and make sure the right checkbox is selected.

 

And there you have it.

The purchase order template found in the Skubana solution is perfect.

Why you ask?

Well because the purchase order module in Skubana lets you do the following:

  • Manually create purchase orders (or automate them)
  • Add, print, send and re-send, receive, void, and cancel purchase orders
  • Authorize purchase orders (including a re-authorization every time they are updated)
  • View the status of all purchase orders
  • View all details related to each purchase order
  • Update details including vendor information, item descriptions and prices

 

In the end, Skubana’s purchase order template has all the important information you need to create a purchase order and send it to your seller, no matter what type they are – supplier, manufacturer, or dropshipper.

The template saves all your work so you don’t have to manually input repetitive information like your company details and vendor information.

Not to mention, it automatically calculates all numbers so you never have to worry about a miscalculation number.

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And, because this template solution automatically generates a unique purchase order number for you, you can easily track all orders and never worry about doubling a purchase order number by accident and causing an interruption in order fulfillment.

And to top it off, because Skubana is designed to unify all your business processes, purchase orders included, you can expect the following solutions to be included in your software to help you scale and grow your business:

  • Order processing that includes routing orders to their designated spots, breaking down large shipments into easier to manage shipments, and replenishing stock or dropshipping with a few clicks
  • Create customized packing slips and return labels, as well as create and automate the return process emails to help the user experience
  • Share FBA inventory to your merchant fulfilled listings
  • Automatically import inventory and shipment details and export orders
  • Tap into your business analytics to make better data-driven decisions
  • Manage inventory for all channels from one convenient location
  • And so much more

As you can see, creating the perfect purchase order template is more than simply filling out a document with your name and your vendor’s name, and adding the items you want to buy.

If you really want to succeed in the highly competitive online retail space, you have to utilize the power of digital purchase orders to keep things organized, cost efficient, and error free.

So, what do you say?

Why not invest in some purchase order software so your business can thrive the way it’s meant to, you can generate more money than ever before, and your entire team can rest a little easier when it comes to the simple things like ordering supplies from a vendor.

 

 

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