In the event you receive the wrong items or are charged the wrong amount, the PO can help you resolve the issue. It can also guard your company against unjustifiable price increases. This way, POs protect you by giving you a legal, enforceable record of precisely what you ordered. Having a legal written agreement regarding the items you ordered, including the pricing and quantity info, can help protect the buyer and the seller. It Provides Legal Protection – A PO acts as a legal document. Plus, you can quickly check whether you’ve received the correct items and in the right quantity and quality when your order arrives. Utilizing a PO system makes it easy for accountants (and business owners) to track orders. Makes Orders Easier to Track – Purchase orders are an important part of record keeping. Why Does a CPA (Certified Public Accountant) Need Purchase Orders?Ī purchase requisition is one of the most important documents to a CPA. In short, they’ve entered into a contract and are now bound to deliver the goods. In most cases, when the vendor accepts a PO, it becomes legally binding. Typically, a purchase order will contain the following elements. The document indicates the details of the goods to be purchased, such as the type of the goods, quantity of the items, agreed-upon price, and payment terms. Let’s dive in!Īlso Read – Top 16 Procurement KPIs – The Ultimate Guide What Is a Purchase Order?Ī purchase order-also known as PO, purchase requisition, or purchase request is a legal document created to ensure your business with vendors or contractors goes smoothly.Ī PO is issued by a business’s purchasing department when placing an order with its vendors or suppliers. We’ll also look into the many benefits you can get by using a purchase order system. This post will explain what PO is and how it differs from an invoice. From tracking orders to managing inventory to managing cash flows and increasing sales, POs play a pivotal role in enhancing daily operations.īoston Consulting Group estimates that by using a PO, a company can reduce costs by 10% and at the same time cut the time spent by up to 30%.īut what exactly is a purchase order, and why do CPAs need one? It’s hard to ignore how important Purchase Orders (POs) are to growing retail businesses. And that’s no other than a purchase order. Gather the accountants, leaders, department heads, store managers, and ask them which document plays the most significant role in the company.īut most will agree that one document is crucial for nearly all business functions, and automating it can ultimately boost your profits.
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