# PO (Purchase order)

> A purchase order (PO) is the document you send a vendor to order goods or services, stating the items, quantities, prices, delivery date and payment terms. Once the vendor accepts it, it is the agreed basis for checking the delivery and the vendor's bill.

In EaseDesk: In EaseDesk, Purchases → Orders → New purchase order, then Save and issue, gives the order its own number, and Email sends the PDF to the vendor's contact. Convert → Make goods receipt or Make purchase bill carries the open lines forward, the order shows what is still due, and Reports → Pending purchase orders lists what has not arrived. The reorder list and production shortages can draft purchase orders for you.

## Why it matters to your business

Most disputes with vendors start with an order placed on the phone: a different rate on the bill,
a quantity nobody remembers agreeing, a delivery date that slipped. A purchase order puts the
agreement in writing before the goods arrive. It also gives you a list of what is on order, so you
do not order the same thing twice and can plan cash for bills that are coming.

## How it works

1. **Raise the order.** You order 400 cartons of an item at ₹150 a carton, ₹60,000 before GST,
   delivery by 10-10-2026, payment in 30 days.
2. **Send it.** The vendor receives the PDF by email and confirms.
3. **Receive the goods.** 300 cartons arrive first. You record a goods receipt for 300, and the order
   shows 100 still due.
4. **Receive the bill.** The vendor bills for 300 cartons. You check the quantity against the goods
   receipt and the rate against the order before you record and pay it.
5. **Close the order.** When the last 100 cartons arrive and are billed, the order is complete.

At any point, the pending orders list tells you what is due from whom, and the order shows how much
of it has arrived.

## Common mistakes

- **Orders on the phone only.** Without a written order, the vendor's bill becomes the only record
  of what was agreed.
- **Not closing short-supplied orders.** If the vendor will never send the last 100 cartons, close
  the balance so it stops appearing as on order.
- **Rates changed on the bill without approval.** Check the bill's rate against the order before
  you pay, and ask for a credit note if it is higher.
- **Ordering without checking stock.** Look at stock and open orders first; a reorder list does this
  for you.

## Questions

### Is GST charged on a purchase order?

No. A purchase order is not a tax document. GST is charged on the vendor's tax invoice when the goods or services are supplied, and your input tax credit is based on that invoice.

### Is a purchase order legally binding?

Once the vendor accepts it, a purchase order is evidence of the agreement between you, including price, quantity and terms. Keep the accepted copy with the vendor's bill.

### What is the difference between a purchase order and a purchase bill?

The purchase order is what you asked for, before delivery. The purchase bill is the vendor's invoice for what they supplied, and it is what you record in your books and claim input tax credit on.

### Do small businesses need purchase orders?

Once more than one person buys, or you buy regularly from several vendors, yes. A written order prevents disputes about price and quantity, and lets you see what is still due to arrive.

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Source: https://www.easedesk.com/glossary/po · Updated 2026-09-28 · EaseDesk