On a construction site, money leaves through purchases: cement, steel, fittings, hired equipment. If anyone can buy and the bill arrives afterwards, the budget is already spent before accounts hear of it. A purchase order process moves the control to the front: nothing is committed until the right person approves it. This guide explains how to run purchasing from order to payment, and how to keep it simple.
Why purchase orders matter on sites
- Commitment is visible early. An approved order tells you what you have promised to pay.
- Prices are agreed in writing. The bill can be compared with what was ordered.
- Duplicates are caught. Two site managers ordering the same material is spotted.
- Approval is recorded. You know who agreed to each purchase.
The chain from order to payment
- Order raised by the site or purchasing, in draft.
- Order approved by someone with the authority to commit money.
- Goods or services delivered.
- Supplier bill recorded, checked against the order.
- Payment made, settling the bill.
Every step leaves a record, so a purchase can be followed from the order to the money leaving the bank.
A simple approval rule
Write down who can approve what. For example:
| Order value | Approver |
|---|---|
| Up to Rs 100,000 | Site manager |
| Rs 100,001 to Rs 1,000,000 | Project manager |
| Above Rs 1,000,000 | Director |
The numbers are yours to set. The point is that the rule is written and followed.
Withholding tax at payment
Many supplier payments are subject to withholding tax, which is deducted when you pay. Doing this by hand, with part payments, is where errors happen. See withholding tax on supplier payments for how the calculation works.
Common mistakes
- Raising the order after the purchase. Then it is only a record, not a control.
- Approving your own orders. Separate the person who orders from the person who approves.
- Not checking the bill against the order. Price and quantity differences slip through.
- Ignoring open orders. Orders not yet billed are commitments against the budget.
- One approver for everything. Large purchases need a higher level.
How OneAccounts does it
With the Purchase orders add-on, an order starts as a draft. A user who has the permission to approve purchase orders approves it, and its status changes to Approved. Only approved orders can be billed. When you enter a supplier bill, that supplier's approved orders appear with the amount still left to bill, so the bill can be raised from the order, and the payment then settles the bill. Because every bill is also validated against the site budget before it posts, an approved order cannot push a cost code over budget unnoticed.
With the Tax management add-on, you choose the withholding tax code on the bill. At payment, the gross, the tax and the net are worked out, including for part payments. Fixed assets bought through the same chain can be kept in the asset register.
See Construction accounting software and site budget vs actual.
Frequently asked questions
Who can approve a purchase order?
Only a user who has been given the permission to approve purchase orders. You decide who that is.
Can I raise a bill without an order?
Yes. Small or urgent purchases may not need one. Decide your own rule on when an order is required.
Is the purchase order add-on included?
It is an optional add-on, available for any business type.
Does the system check the bill against the order?
The bill can be raised from the order, so the items and prices come from it. You can still correct the bill if the supplier invoiced differently.
How do I see what is committed but not yet paid?
Open orders and unpaid bills show what you have promised. Review them with the budget report before approving large orders.