Purchase Order

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What is it?

A Purchase Order is a standard document or template that your customers or clients can use to order goods or services from your business. A Purchase Order is a formal way to record the orders made for your goods or services and will help to sure that you are in a position to meet the needs of your clients or customers. When you accept the Purchase Order, a binding contract is formed.

Why do you need it?

If your clients or customers are placing repeat orders for your goods or services, then it is good practice to provide a standard Purchase Order so that they can make repeat orders as and when they need them. A Purchase Order allows the customer to set out their delivery address, the number of goods or scope of services, the price, and the shipping costs where appropriate. It allows you to set out your payment terms and keep an adequate record of orders that you can then match with your invoices.

Key clauses to watch for:

When drafting a Purchase Order, it is important to focus on a number of key clauses, in particular:

  • Name of your business;
  • Name and address of your customer;
  • Delivery address of your customer;
  • Date of the purchase order;
  • Name or title of the person ordering;
  • Payment terms for the order;
  • Quantity of goods or description of services;
  • Unit price;
  • Total price of all the goods; and
  • Shipping, handling, and other costs.

This document is also sometimes called:

Purchase Order Form.

Purchase Order Document

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