This article explains what a Purchase Order is and how you can enable, use and track it in QuickBooks Online.


 

Define Purchase Order

A purchase order (PO) is a document you can send to a vendor/supplier. It states your intent to purchase products or services from them and defines the details of the purchase, such as quantities and prices. If they accept your PO, it means you have an agreement with them to receive those products or services under the terms given.

Enable purchase order

Purchase orders are available in QuickBooks Online Plus and in older QuickBooks Online Edition products (with optional Sales package enabled).

To check if the feature is enabled in your company, select the Plus icon (+) at the top, then Purchase Order. If you don’t see it, select Show more at the bottom. If you see Purchase Order but you get the message We're sorry! Purchase Orders is turned off when you select it, you'll need to enable the feature by selecting the Settings link or by going through these steps:

  1. Select the Gear icon at the top, then Account and Settings (or Company Settings).
  2. In the left sidebar, select Expenses.
  3. To the right, select the pencil icon next to Purchase orders.
  4. Check the Use Purchase Orders box.
  5. (Optional) Enter titles for up to 3 custom fields.
  6. (Optional) Enter a Default Message on purchase orders.
  7. Select Save then Done.

NOTE: Formatting of the Purchase Order comes from the Master Sales Form Template, regardless of whichever template you have set as default. Currently, there is no way to customize purchase orders further with different content, layout and style options.

Enter a purchase order

  1. Select the Plus icon (+) at the top, then Purchase Order.
  2. From the Vendor/Supplier drop-down, choose or add a vendor/supplier.
  3. If you are shipping a product directly to a customer, select the Ship To drop-down and choose the customer.
  4. If you're using custom fields, fill them in as needed.
  5. In the Account details and/or Item details section, enter the purchases. Note that only the products or services marked I purchase this product/ service from a vendor/supplier will appear in the Item detail section.
  6. Select Save and Send, Save and Close or Save and New to complete the entry.
 

REMINDERS!

  • As you enter a purchase order, you'll see that the Status in the upper-left corner is automatically set to Open. This status will be automatically changed to Closed when all quantities and/or amounts on the purchase order are indicated to be received and/or paid across all linked transactions. You can edit an existing PO at any time to change its overall status, or the status of its individual lines.
  • When adding a purchase order, you can select a customer for each line item. To make these items billable to the customer(s), you must mark the Billable box after adding the PO to a vendor/supplier transaction.

Apply a purchase order to a transaction

  • If a PO is accepted and completed, you'll need to record a bill, a check/cheque, or Expense such as a credit card charge, or a cash transaction showing what you paid or still owed.
  • When you select a vendor/supplier on any of these transaction types, the Purchase Orders section will appear on the right hand side of the screen. To add a PO to the transaction, just select Add on the purchase order displayed. The PO will be added on the first available line in the Item details or Account details section below.
  • A purchase order is automatically closed when all quantities and/or amounts on the purchase order are accounted for across all of its linked transactions.
  • If a PO is added to a transaction by mistake, you can remove it by selecting the Trash can icon on the far right of the line item. If this is done before saving the transaction, the PO will stay open. However, if you save the PO to the transaction and then have to edit the transaction by deleting the PO, the PO will remain close and must be manually changed back to Open.
  • When linking a bill, check/cheque, or expense to a PO, the date on the transaction has to be on or after the date on the PO.
  • Currently, you cannot add negative line items from a purchase order onto a bill, check/cheque, or expense. If you'd like to record a potential refund, the best option is to record a vendor/supplier credit.

Receive or pay part of a purchase order

If you are receiving a partial amount on a purchase order, or making a partial payment, you can add part of a purchase order to a transaction, and link multiple transactions to a single purchase order.

  1. Select the Plus icon (+) at the top then, Bill, Check/Cheque or Expense.
  2. From the drop-down, choose or add a vendor/supplier. A purchase order section will appear on the right hand side of the screen.
  3. To add a PO to the transaction, select Add on the purchase order displayed. Details from the purchase order will be added on the first available line in the Item details or Account details section.
  4. Edit the quantity or amount for each line to reflect the portion that you would like to record as partially received or paid.

You can link multiple transactions to a single purchase order. QuickBooks automatically closes a purchase order when all quantities and/or amounts on the purchase order are accounted for across all of its linked transactions. You can manually close the purchase order by changing its status or by manually closing individual lines on it.

Run purchase order reports

QuickBooks Online has a number of reports that will help you with your purchase orders. To view these reports:

  1. Select Reports from the left menu.
  2. Select All Reports at the top then Review Expenses and Purchases.
  3. In the Review Expenses and Purchases reports section, you will find the Open Purchase Order List, Open Purchase Order Detail and other Purchase Detail reports. Select to run or customize the report.
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