Editing Purchase order (section)

== Overview 054 ==
Purchase orders allow buyers to clearly and openly communicate with the sellers to maintain transparency. They may also help a purchasing agent to manage incoming orders and pending orders. Sellers are also protected by the use of purchase orders, in case of a buyer's refusal to pay for goods or services.<ref name=":0">{{cite web|url=http://finance.loyno.edu/purchasing/purchase-order-benefits|title=Purchase Order Benefits|publisher=[[Loyola University New Orleans]]|access-date=29 August 2016|archive-date=17 February 2019|archive-url=https://web.archive.org/web/20190217155739/http://finance.loyno.edu/purchasing/purchase-order-benefits|url-status=dead}}</ref>
 
Purchase orders provide benefits in that they streamline the purchasing process in a standard procedure. Commercial lenders or [[financial institution]]s may provide financial assistance on the basis of purchase orders.<ref name=":0" /> There are various [[trade finance]] facilities that almost every financial institution allows business people to use against purchase orders such as:
 
# Before shipment credit facility
# Post shipment credit facility
# Trade finance facility
# Foreign bill purchase credit facility
# Bill retirement credit facility
# Order confirmation
# Followup
 
The purpose of purchase orders is to procure materials for direct consumption or for stock, procure services, fulfil customer requirements using external resources, or procure a material that is required in production from an internal source (long-distance intra-plant stock transfers). They may also place once-only procurement transactions and optimize purchasing by taking full advantage of negotiated conditions or for optimal utilisation of existing resource capacities.<ref name=":0" />
 
Creating a purchase order is typically the first step of the [[purchase-to-pay]] process in an [[ERP system]]. Purchase orders may require a [[Stock keeping unit|SKU code]].

Many organisations encourage staff to use a [[purchasing card]] (or procurement card) for low value purchases instead of issuing a purchase order.<ref>[[Oxfordshire County Council]], [https://schools.oxfordshire.gov.uk/cms/sites/schools/files/folders/folders/documents/schoolsfinance/budgetandfinancialplanning/purchasing_card_policy.pdf Purchasing and Embedded Card Policy], accessed 24 May 2023</ref>

Future business scenarios anticipate a reduced role for purchase orders or even their full elimination, leaving organizations with a smaller and more strategic procurement function than in the past. Kai Nowosel and Kris Timmermans of consultants [[Accenture]] ask why purchase orders and invoices are needed when digital systems can deliver goods confirmations and authorize funds, and suggest that digital functionality and supply analytics will change the landscape for purchase orders and processes "in the coming years".<ref>Nowosel, K., [https://www.sdcexec.com/sourcing-procurement/article/12119346/accenture-is-yours-a-procurement-organization-of-one Is Yours a Procurement Organization of One?], published 28 September 2015, accessed 1 September 2023</ref>