Purchase Order Template

On the selling side, the vendor answers a request with a price quote and bills with an invoice that cites your PO number.

Before paying a vendor bill, compare three documents: the purchase order (what you agreed to buy and at what price), the receiving record (the packing slip or receiving report showing what arrived) and the vendor's invoice (what you are asked to pay). Pay only when item, quantity and price agree across all three.

1. When the delivery arrives, count it against the packing slip and note shortages or damage.
2. Sign and date the slip and attach it to the PO.
3. When the invoice arrives, check its PO number, quantities and unit prices against both.
4. Pay the matched amount; send the vendor a note for anything short, damaged or overpriced.

Many businesses accept small differences within a set tolerance, such as a few dollars of freight. For services there is no delivery to count, so a two-way match (PO to invoice) plus a sign-off from whoever received the work does the job. The match catches duplicate bills, short shipments and prices that drifted from the quote.

FOB terms decide who carries the loss if goods are damaged or lost in transit. Under Uniform Commercial Code section 2-319, which applies unless the parties agree otherwise:

• FOB Shipping Point: the vendor must get the goods to the carrier; risk passes to you at that point, so you usually pay freight and file any damage claim with the carrier.
• FOB Destination: the vendor bears the cost and risk of getting the goods to the named place, usually your door.

Freight payment can be agreed separately (for example, FOB Shipping Point, freight prepaid and added to the invoice), so write both the FOB point and who pays shipping on the PO. International orders usually use Incoterms, published by the International Chamber of Commerce, instead of FOB under the UCC.

A purchase order is an offer. It becomes a contract when the vendor accepts it, whether by signing, sending an order acknowledgment or simply shipping the goods (UCC section 2-206). If the vendor's acknowledgment adds or changes terms, a contract can still form, and section 2-207 decides whether the new terms apply. For goods priced at $500 or more, a signed writing makes the order enforceable under section 2-201.

Put the terms that matter on the face of the PO (price, quantity, delivery date, payment terms and FOB point) rather than in fine print. This is general information, not legal advice; have an attorney review standard purchase terms before you rely on them.

• Standard: a one-time order with known items, quantities, prices and delivery date. This template is a standard PO.
• Planned: items and prices are set, delivery dates are tentative and released as needed.
• Blanket: agreed prices for repeat purchases over a period, often with a spending cap, with individual releases against it.
• Contract: a master agreement on terms, with separate standard POs that reference it.

Goods you buy to resell, or that become part of a product you sell, are usually exempt from sales tax when you give the vendor a resale or exemption certificate accepted in your state. Supplies and equipment your business uses are taxable. If a vendor does not charge tax on a taxable purchase, for example an out-of-state seller not registered in your state, most states expect you to report and pay use tax yourself. Mark lines taxable on the PO only when you expect the vendor to charge tax; check rates with the sales tax calculator.

The prefilled PO is a coffee shop ordering cups, lids, oat milk and straws from a restaurant supplier, for resale with a certificate on file, so no tax is charged. Freight is a flat $45 and the terms are FOB Destination, Net 30.

The order totals $1,151.80. When the delivery arrives, the shop signs the packing slip; when the supplier's invoice for PO-2026-014 arrives, it should show the same four lines and $1,151.80, due 30 days from the invoice.

Restaurants and retailers ordering inventory, contractors ordering materials for a job, agencies hiring subcontractors, and any business that wants a second person to approve spending before it happens. Even a one-person business benefits on larger orders: the PO fixes the price and delivery date in writing before the money moves.