Purchase Order (PO)
Definition
A document you send a supplier specifying products, quantities, prices and terms. Once accepted, it becomes the agreement for that order.
Want a deeper explanation?
POs are the backbone of inventory control. They let you track what is on order, match bills to what was agreed and plan the cash for deposits and balances.
They also make landed cost and PPV possible. Watch for: orders placed by email or WhatsApp with no PO in the system, which leave your commitments invisible to your cash plan.
Example
PO #1042 orders 5,000 units at $6.20 FOB, with a 30% deposit and the balance due before shipping.