Invoicing & purchase order numbers

Can anyone tell me the story with PO numbers? I've come across them in the past, and they've been a major irritation on an invoicing front.

Example: Invoice someone. two weeks later they come back with a PO Number. I change invoice, and resend it out. They in turn get another 15-25 days credit in which to pay.

Do i need to accept PO Numbers from a customer?

Also, is it possible to request a single PO number to cover the whole company, to be applied to all invoices like a Vat Exemption Number?

And does a PO Number apply to the Service industry?



Cheers

De Rebel

PO (Purchase Order) Numbers are a piece of information which is voluntarily exchanged between purchaser and vendor and vice versa in a mutually agreed manner. It has no legal significance and there is no legal requirement for a purchase order number to be displayed anywhere.

This is in contrast to an Invoice document the minimum content of which is determined by the Revenue Commissioners.

The rules governing this are the rules governing any commercial exchange, basically if the purchaser requires you to show his PO number on the invoice, then it is in your interests to do so. There is no legal obligation on you to do so.

On the other hand, it would be reasonable for the purchaser to supply the PO number at the time the order is placed, thereby allowing you to bring it through your system and display it on the invoice.

Many vendors will ask for the purchase order number when an order is being placed, especially from customers who need to see it on the Invoice.

In summary, the ball is in your court. Put a procedure in place whereby you get a purchase order number at the time the order is placed, and always show it on the invoice. Whether you do this for all customers or just those that require it is up to you.

Thanks. The info is much appreciated. TBH, out of near a thousand clients, theres on;y one that persists in having PO Numbers, and that of course is a government based company.

Still, due to this info, i'll be able to resolve this with them.

Victor

Originally posted by klaz
Thanks. The info is much appreciated. TBH, out of near a thousand clients, theres on;y one that persists in having PO Numbers, and that of course is a government based company. Still, due to this info, i'll be able to resolve this with them.

I think it works one of two ways (a) the company is so large and has so many invoices / orders, it needs ot be able to track them (b) people are being bureaucratic / looking for extra credit time.

Borzoi

Originally posted by klaz
Thanks. The info is much appreciated. TBH, out of near a thousand clients, theres on;y one that persists in having PO Numbers, and that of course is a government based company.

We deal with numerous companies who use PO system (as do we) some are good some are awful. The way it's handled in our place is that the sales rep who took the call should get a PO number, if not from the engineer ordering, he should phone the purchasing dept. of the company involved and get a number. That way every invoice, every dispatch from us has a relevent PO number, so no delayed payments.

i.e. no PO, no delivery.:)

Dr_Teeth

With my company the process is as follows:

1. We agree with a client to do some work for them. We supply them with a quote which they agree to.

2. They generate a PO on their system for the quoted amount.

3. They send us a PO form giving the PO number and amount, which we agree to and return.

4. We do the work.

5. We supply the client with an invoice noting the PO number.

6. The client uses the PO on the invoice to help them authorize the payment internally.

7. We get paid.

So, basically a PO number is a way for a company to get a handle on some goods/services that they have agreed to buy, but haven't paid for yet.

You should get a PO number when you agree to do the work, and put it on the invoice when the work is done.

It has no legal bearing, it's just part of the accounts-payable procedure for most large companies in my experience.

Teeth.

parsi

Originally posted by klaz
Thanks. The info is much appreciated. TBH, out of near a thousand clients, theres on;y one that persists in having PO Numbers, and that of course is a government based company.

Still, due to this info, i'll be able to resolve this with them.

I work for a Gov org and we use purchase orders for a number of reasons:

1. Track purchases from time purchasing decision was made (eg three quotes, tender etc) to invoice and subsequent payment,

2. Track assets - on the assets register the assets have the relevant PO attached - this helps track down costings, warranty period, purchaser etc - this is extremely useful for doing the appropriation accounts or when the auditors call.

3. Centralise purchasing - we won't pay for (in our case) IT related goods/services that weren't accompanied by a PO - this helps to ensure that control is exercised over purchases eg adherence to procurement regulations etc.

None of the companies I have dealt with have said that they find POs a pain in the neck. In fact it helps considerably in actioning invoices for payment or responsing to subsequent queries. When an invoice arrives in our section it is checked to see who authorised purchase and they are asked to authorise payment. Theres no messing around with "who bought the 4 widgets from gadget & CO?".

slave1

po's can also help the supplier of the goods/service
typically a PO is approved/authorised
on an integreated accounting system the accounts payable dept. punch in the PO number quoted on an invoice
The PO history will then pop up showing whether the product/service has been receipted, if so the invoice is ready for payment, no further authorisation required
Speedy

Our co insists on PO's and this is laid out in an initial agreement with all suppliers, if some GI Joe does work unauthoried without a PO we do not have to cough up - usually do though and slap the wrists of the employee

PO = Good

Victor

Originally posted by slave1
Our co insists on PO's and this is laid out in an initial agreement with all suppliers, if some GI Joe does work unauthoried without a PO we do not have to cough up

Well the supplier could sue on ligitimate expectation / quantum meruit. Requested work was done - thats what the judge is going to look at.

De Rebel

Originally posted by Victor
Well the supplier could sue on ligitimate expectation / quantum meruit. Requested work was done - thats what the judge is going to look at.

If there was a established written agreement in place between the vendor and the purchaser that stipulated that no goods/services were to be supplied unless a valid PO had been presented, then the judge would take that into account.

Victor

Originally posted by De Rebel
If there was a established written agreement in place between the vendor and the purchaser that stipulated that no goods/services were to be supplied unless a valid PO had been presented, then the judge would take that into account.

And "look, will you fit this extra widget urgently or the whole system will break down" will also be considered.

Specky

In my experience it's usually the vendor who demands an official PO from the purchaser, usually as some sort of validation that they are entering into the "purchasing agreement".

The idea is that if I receive a PO from you (rather than just a verbal request) you are less able to deny knowledge of the transaction at a later date and I am more likely to be able to pursuade you to pay.

It's just about making records so you have a paper trail to follow in the event of an issue.

I don't understand the point in the original post about the invoice having to be re-issued or anything....that's nonsense.

The purchaser decides to buy something. You supply it and ask to get paid under your terms and conditions. If the purchaser accepts the goods he's accepted your terms and conditions and therefore needs to pay in accordance with those terms. Sending you a PO or a PO number or anything else doen't change the terms.