How to Make a Purchase Order (Format and Process)

A purchase order (PO) is your written order to a vendor: what you're buying, how much, at what price and by when. Once the vendor accepts it, it's the basis for delivery, invoicing and payment.

What a PO must contain

• Your company name, address and GSTIN
• PO number and date
• Vendor name and address (and GSTIN)
• For each item: description, unit, quantity, rate and GST rate
• Taxable value, GST and total amount
• Delivery date and place
• Payment terms and any quality or documentation requirements
• Authorised signature

PO numbering

Use one series per financial year, for example PO-26-101, PO-26-102. Never reuse or skip numbers without a note. Auditors check the series.

GST on a PO

A PO shows the GST you expect to pay: CGST + SGST if the vendor is in your state, IGST if they're in another state. Input tax credit is claimed on the vendor's tax invoice, not the PO, so check that the invoice matches.

A simple purchase process

1. Request: the department raises a need with specification and quantity.
2. Quotes: get two or three quotes for anything above a set amount.
3. Approve: the approver signs off on vendor and price.
4. Issue the PO and get the vendor's acceptance.
5. Receive goods: stores checks quantity and quality and records what was received.
6. Three-way match: PO, goods received and the vendor's invoice must agree on item, quantity and rate.
7. Pay as per terms.

Why the three-way match matters

It stops paying for goods not received, paying a higher rate than agreed, and paying the same invoice twice. Most purchase fraud and leakage happens where this step is skipped.

Track open POs

Every week, look at POs with delivery dates passed and nothing received. A quick call to the vendor saves a production delay.

Small purchases

Not every purchase needs a full PO. Many companies allow petty purchases below a fixed amount (for example ₹5,000) against a simple bill and approval, and use POs for everything above. Write the limit down so stores and accounts apply it the same way.

Our Purchase Order Register & PO Format keeps every PO line with GST, receipts and payments, and prints a clean purchase order for any PO number.