Buying is where a trading business spends most of its money, and where control is easiest to lose. A phone call to a supplier, a delivery that does not match, a bill that arrives with a different price: each is a chance to pay for something you did not order. The purchase order, matched to the goods and to the bill, is the simplest control there is. This guide explains the flow and how to keep it light enough to use every day.
The purchase flow
- Need. Stock is low, or a customer has ordered.
- Purchase order. You tell the supplier what you want, at what price and by when.
- Approval. Someone with authority agrees to the spend.
- Delivery. The goods arrive with a delivery note.
- Check. Quantity and condition are compared with the order.
- Bill. The supplier's invoice is entered against the order.
- Payment. You pay on the agreed terms.
Each step is simple. The control comes from linking them.
Why a purchase order matters
A purchase order:
- fixes the price and quantity before the goods arrive,
- gives you something to compare the bill with,
- shows how much you have committed but not yet received,
- and shows who authorised the spend.
Without it, the supplier's invoice is the only record, and it is whatever the supplier says it is.
Three-way matching
The classic control compares three documents:
| Document | Says |
|---|---|
| Purchase order | What you ordered and at what price |
| Delivery note | What arrived |
| Supplier bill | What you are asked to pay |
If all three agree, you pay. If not, you find out why before you pay.
Example: you order 200 units at Rs 400 (Rs 80,000). 180 arrive. The supplier bills 200 units.
| Check | Ordered | Delivered | Billed |
|---|---|---|---|
| Quantity | 200 | 180 | 200 |
| Value (Rs) | 80,000 | 72,000 | 80,000 |
The bill is Rs 8,000 too high for what arrived. Without matching you would have paid it.
Partial deliveries and partial bills
Suppliers often deliver in parts. Keep the order open until it is fully billed. For a Rs 200,000 order:
| Bill | Amount (Rs) | Remaining on the order (Rs) |
|---|---|---|
| First bill | 120,000 | 80,000 |
| Second bill | 80,000 | 0 |
When the remaining value reaches zero, the order is complete. Until then, it shows as outstanding.
Approval
Decide who may approve what. A simple rule: anyone can request, one named person approves, and above a set amount the owner approves. Draft orders can be edited; approved orders should not be changed without a record.
Keep stock and bills in step
When goods arrive, enter the bill so that stock is updated. Otherwise, the stock check on sales will block goods you actually have. See how to stop selling stock you do not have.
Withholding tax
Many purchases in Pakistan carry withholding tax. Decide the treatment at the bill, not after the payment. See how withholding tax is posted on a vendor payment.
Common mistakes
- Ordering by phone and entering nothing.
- No approval. Anyone can commit the company.
- Paying without comparing the bill with the delivery.
- Closing an order before it is fully billed.
- Late bill entry. Stock and payables are both wrong.
How OneAccounts does it
Purchase orders can be created as drafts and edited, and approved by a user who has the permission to approve purchase orders. When you enter a supplier bill, you can pull in the approved orders for that supplier. The bill records the order it came from, and the order stays open while the value billed is less than the value ordered, so partial billing works. A purchase order PDF can be printed.
OneAccounts does not have a separate goods-received step on purchase orders, so the check of delivered quantity against the order is done by your store staff against the delivery note. See Trading ERP software.
Frequently asked questions
Do I need a purchase order for every purchase?
For regular and larger purchases, yes. Small cash purchases can follow a simpler rule.
What is three-way matching?
Comparing the purchase order, the delivery note and the supplier bill before you pay.
Can an order be billed in parts?
Yes. Keep the order open until the full value is billed.
Who should approve purchase orders?
A named person with authority, with a higher limit for the owner.
What if the bill price differs from the order?
Query it with the supplier before you pay, and record the agreed price.