According to Wikipedia, “A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a purchase order to a supplier constitutes a legal offer to buy products or services. Acceptance of a purchase order by a seller usually forms a contract between the buyer and seller, so no contract exists until the purchase order is accepted. It is used to control the purchasing of products and services from external suppliers”.

Purchase order management is a computer software which facilitates to create requisitions, purchase order, approval of the order, receiving goods or services, receiving vendor’s invoice and creating bill and payment processing. Purchase order management software is tightly integrated with Vendor Information System, Inventory and Accounting.

Datamoto purchase order module is fully integrated system which can be used independently or with other modules. Once a purchase order is created, Datamoto helps you to follow the standard processes such as approving purchase order (for small business you may choose to self-approve a purchase order), receive the delivered goods or services, create bill manually or generate automatically, approve the bills and send to Payment for processing.

1. Quotations (or Estimates)

As per buyer’s request, sellers send quotes to buyer indicating products or services, quantity, cost, terms and conditions etc. Upon receiving quotations from sellers, buyer follows its business process to select a quote. Once a quote is selected, buyer informs the seller and creates a purchase order.

2. Purchase Order

In Datamoto when you create a purchase order for a vendor, it is always a good practice to enter vendor’s quote number and the name of the person who requested the purchase. Though this information is not mandatory, this will help you to track or audit the purchase order easily.

Once purchase order is approved, buyer sends purchase order to seller. Seller creates a sales order and sends notification of acceptance of the purchase order – this forms the legal contract between buyer and seller.

3. Receiving goods or services

As a buyer you can receive goods or services in two ways in Datamoto. One way of receiving goods or services from the purchase order module directly and another way is to use receive module. The receive module is useful when goods are received in the warehouse and some users are restricted to access purchase order module.

4. Returning goods

Sometimes it is necessary to returns goods that are received from a seller. Datamoto provides returning goods functionality in purchase order module where you select the items and quantities that you want to return. It automatically generates an invoice for Vendor.

5. Bill and Vendor Invoice

A bill is a document which buyer creates for its own internal auditing purpose against an approved purchase order. You cannot create a bill without an approved purchase order. In Datamoto bill can be created manually or automatically. When goods or services are received, a bill is automatically created.

Buyer needs an invoice from vendor to process payment. Once vendor submits the invoice for goods or services, seller can open the bill (if it is not yet created then create one) and enter the vendor’s invoice number.

6. Payment

A bill can only be approved if vendor’s invoice number is present and a bill can only be paid to customer if the bill is approved or in partial paid status. Datamoto provides payment module to process payment for bills.