How Do I Create a Purchase Order Online?

A purchase order is a formal document issued by a buyer to a seller specifying goods/services required, quantities, agreed prices, delivery terms, and payment terms. It is a binding contract once accepted by the seller.

Not mandatory under GST law, but highly recommended for B2B transactions. Buyers often require vendors to quote the PO number on their GST invoice for proper procurement tracking and three-way matching (PO → GRN → Invoice).

Three-way matching is an accounts payable process where the PO, goods receipt note (GRN), and vendor invoice are compared before payment is approved. This prevents duplicate or fraudulent payments.

A PO is not a tax document and does not charge GST. GST is charged on the vendor's invoice. The PO may mention expected GST rate for budget purposes, but actual GST is determined at the invoice stage.

Common PO payment terms: Net 30 (pay within 30 days), Net 60, 50% advance + 50% on delivery, Cash on Delivery (COD), or Letter of Credit (for large international orders). Always specify terms clearly to avoid disputes.