Purchase Order
A Purchase Order (PO) is a binding contract between a company and its supplier, confirming the intention to purchase specific items under agreed terms and conditions.
It is similar to a Sales Order, but used internally for procurement management and supplier commitments.
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1. Prerequisites
Before creating a Purchase Order, ensure the following are available:
2. How to Create a Purchase Order
A Purchase Order can be created manually or automatically from a Material Request or Supplier Quotation.
- Go to the Purchase Order list and click New.
- Select the Supplier and required-by date.
- Add items in the items table.
- Set quantity; rates may be auto-fetched from Item master or pricing rules.
- Add applicable taxes and charges.
- Save and Submit the document.
The Purchase Order then becomes a legally binding document between buyer and supplier.
2.1 Setting Warehouses
A default Target Warehouse can be set where purchased items will be delivered. This is automatically applied to item rows.
2.2 Fetching Items from Material Requests
Items can be automatically fetched from open Material Requests when supplier matching rules are configured.
- Select Supplier in Purchase Order.
- Ensure Supplier is set as default in Item master.
- Material Requests of type “Purchase” must exist.
- Use Get Items from Open Material Requests.
This helps streamline procurement from demand to purchase.
3. Features
3.1 Address and Contact
Supplier billing and shipping addresses are automatically fetched from the Supplier master.
For GST-enabled regions, Supplier GSTIN, Company GSTIN, and Place of Supply are also recorded.
3.2 Currency and Price List
Purchase Orders support multi-currency transactions and pricing rules. Item rates can be fetched from price lists or overridden manually.
3.3 Subcontracting
The “Supply Raw Materials” option is used in subcontracting scenarios where raw materials are provided to the vendor for manufacturing.
3.4 Items Table
The items table supports barcode scanning, UOM conversion, warehouse tracking, and cost allocation.
Rates can be fetched from standard buying price, last purchase rate, or item master defaults.
Each item can also be linked to a project, BOM, or blanket order for better traceability.
3.5 UOM Conversion
ERPNext allows purchasing in one unit (e.g., Boxes) while storing stock in another unit (e.g., Nos) using conversion factors.
3.6 Taxes and Charges
Taxes, shipping, and insurance charges can be added to calculate total landed cost.
These can be managed using tax templates and shipping rules.
3.7 Additional Discount
A global discount can be applied on the entire Purchase Order either as a percentage or fixed amount, before or after taxes.
3.8 Payment Terms
Payment schedules can be defined for partial payments such as advance and post-delivery payments.
3.9 Terms and Conditions
Standard procurement terms can be added and printed on Purchase Orders for supplier reference.
3.10 Print Settings
Purchase Orders support custom print formats, letterheads, and grouped item printing.
3.11 More Information
This section tracks document status, received quantity percentage, billed quantity, and inter-company links.
4. After Submission
Once submitted, a Purchase Order enables the following actions:
- Create Purchase Receipt
- Create Purchase Invoice
- Create Payment Entry
- Create Journal Entry
- Update or manage items (with restrictions on received items)
