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. Purchase orders can be an essential part of enterprise resource planning (ERP) system orders. Companies use purchase orders for several reasons. Purchase orders allow buyers to communicate their intentions clearly and explicitly to sellers.
Purchase Order Number
A purchase order number is an unique number (unique within the company) assigned by a buyer in the PO to identify the purchase order. A PO number is must in any an PO document. A PO number is linked to the sales order, bill, invoice and inventory item activities such as pick or replenishment.
There is no set format for a PO number. Each company may choose to create a specific way to create a PO number. A common method is to prefix or post fix date with a counter to generate a purchase order number. A purchase order system usually provide a configuration template to auto generate purchase order numbers.
Best Practice to Generate Purchase Order Number
Here is an best practice to generate a purchase order number:
- Use letter prefix such as “P” to differentiate PO number from other numbers such as invoice, sales order etc.
- Next, use two letters year as part of the PO
- Next use a counter, for example it starts from 1 and increments one for next PO number.
If today’s date is Oct 8, 2021 and you set the counter to 1000 and your prefix is “PO-“, then your next purchase order number should be “PO-211001”. Your purchase order system should help you to set this up and auto generate the purchase order number.