What is a purchase order? (and when do small sellers need one)
A purchase order is a written order to your supplier listing items, prices and a date, and it saves small sellers from "I thought you said" arguments.
What it is
A purchase order, often shortened to PO, is a short written order that you send to a supplier. It says exactly what you want to buy, in what quantity, at what price, and by when. Once the supplier agrees, it becomes the reference both of you point to.
You are the buyer here. It is the mirror image of the invoice your supplier sends you later.
Why a tiny seller bothers
Most small sellers order by phone or WhatsApp voice note. That works until it does not: the price changed, the colour was different, the delivery slipped by a week. A PO does not make a supplier more honest. It simply gives both sides one clear page to check, so the argument ends quickly.
It also helps your own memory. Three months later you can see what you ordered and what you paid.
What goes in it
Keep it to one page. A useful PO contains:
- Your business name and contact number
- The supplier's name
- A PO number, even if it is just 001, 002, 003
- Date of the order
- Each item with a description, quantity and price per unit
- The total
- Expected delivery date
- Payment terms, for example advance paid, balance on delivery
- Delivery address
A sample you can copy
Purchase order 007, dated 12 of the month.
To: a local cotton bag maker.
Items: - Plain tote bag, natural colour, 100 pieces at Rs 38 each, Rs 3,800 - Tote bag with drawstring, black, 50 pieces at Rs 46 each, Rs 2,300
Total: Rs 6,100.
Advance paid: Rs 3,000 by UPI. Balance Rs 3,100 on delivery.
Delivery wanted by: the 28th of the month, to the studio address.
Notes: stitching must match the approved sample kept with both parties.
Everything above is illustrative, but the structure is what matters. Notice the line about the approved sample. Quality disputes usually come from a gap between what was imagined and what arrived, so tie the order to a physical sample whenever you can.
When you actually need one
You do not need a PO for a Rs 300 restock from the market. You probably want one when:
- The order value is large for your business.
- The goods are customised or made to your specification.
- You are paying an advance.
- The supplier is new to you.
- Delivery date matters, for example before a festive rush.
If the order touches your minimum quantities, the post on what MOQ means for sellers explains how to negotiate them.
How to send it
A PDF or even a clearly formatted WhatsApp message is fine. Ask the supplier to reply with "confirmed" and keep that reply. Save every PO in one folder on your phone or drive, named with the number and supplier.
What a PO is not
It is not a legal guarantee on its own, and this post is not legal advice. For anything high value, talk to a CA or a lawyer about terms. A PO is a good-practice record, nothing more.
Connecting it to your costs
Once the goods arrive, compare the invoice with your PO. Then use the real price to work out your cost per unit. The post on landed cost per unit shows how to add freight and packing to it, so your selling price rests on true numbers.
The takeaway
A purchase order is one tidy page: what, how many, how much, by when, and how you are paying. Use it for the orders that would hurt if they went wrong.