Definition

• A purchase order is a document used by a business to request a supply or service in return for payment, generally set for a later date.
  
  

Types

• The standard PO allows a customer to order one time against the referenced PO number and the PO gets closed after fulfillment of the specific product or service. The standing or blanket PO allows a company to order the same product multiple times using the same PO number over an extended purchase period.
  
  

Status

• An open POs status changes based on the purchase activity associated with the PO. The PO can change from open to closed, canceled, back-ordered, incomplete and more depending on the system used.
  
  

Significance

• A company can quickly identify its cash requirements to cover expected receipts through the total dollar amount of open purchase orders.
  
  

Considerations

• Resolve open PO issues (quantity, quality or price discrepancies) immediately. Unresolved issues cause problems in other functional areas (receiving, accounts payable and customer service).