How to Add Purchase Order
Overview
Creating a Purchase Order formalizes your procurement commitment to suppliers. This step-by-step guide walks you through the complete PO creation process from supplier selection to final submission.
Prerequisites
Before creating a Purchase Order:
- Supplier must exist in supplier master with verified GST details
- Items should be created in item master (if ordering catalog items)
- User has "Create Purchase Order" permission
- Department and cost center configured (if tracking by department)
Step-by-Step Guide
Step 1: Navigate to Add Purchase Order
- Click Purchase from sidebar navigation
- Select Purchase Order from submenu
- Click Add Purchase Order button (green plus icon)
- Add Purchase Order form opens
Step 2: Search and Select Supplier
Supplier Name Field:
- Type supplier name or code to search
- System shows matching suppliers with codes
- Select the correct supplier from dropdown
What Happens Next:
- Supplier details auto-populate (address, GST, contact)
- Billing and shipping addresses load automatically
- Default payment terms appear
- Supplier's GST number displays for tax calculation
Step 3: Configure Supplier Details & Addresses
Supplier Details Dropdown:
- Shows all addresses saved for selected supplier
- Select appropriate supplier location/branch
- Supplier address with full details appears below
Billing Address:
- Defaults to your company's registered billing location
- Dropdown shows: Business unit names with addresses
- Select billing entity if multiple business units exist
Shipping Address:
- Choose delivery location from dropdown
- Options include: Head office, branch offices, warehouses
- Full address displays below selection
- Address used for delivery and logistics coordination
Step 4: Fill PO Header Information
PO Number (PO#):
- Auto-generated based on configured format (e.g., PO-1010)
- Can be manually edited if needed
- Click pencil icon to modify
PO Date:
- Defaults to today's date
- Select different date if backdating required
- Format: DD/MM/YYYY
Expected Delivery Date:
- Set realistic delivery expectation
- Used for delivery tracking and alerts
- Required field (marked with red indicator if empty)
PO Expiry Date:
- Optional validity period for the order
- After this date, PO cannot be billed (if configured)
- Format: DD/MM/YYYY
Payment Terms:
- Dropdown shows standard options: Net 30, Net 60, Advance, etc.
- Defaults to supplier's payment terms
- Determines payment due date calculation
Department:
- Select department for cost allocation
- Optional field for tracking departmental spending
- Helps in budget monitoring and reporting
Reference:
- Free text field for any reference number
- Use for: Supplier quotation number, PR number, project code
- Helps in cross-referencing and audit trails
Step 5: Add Line Items
Item Details Column:
- Click dropdown to search items
- Type item name or code to filter
- System shows: Item code, Item name, Description
- Select item from list
Account Column:
- Select expense account for booking
- Dropdown shows account categories:
- Asset (Fixed Assets, etc.)
- Expense (Purchase Expenses, Office & Admin, etc.)
- Purchase Expenses (for stock items)
- Choose appropriate account based on item type
Quantity:
- Enter numeric quantity
- Unit of measure shown from item master
Unit Price:
- Auto-filled from item's purchase price
- Can be manually edited for negotiated prices
- Verify price matches supplier quotation
Discount(%):
- Enter discount percentage if applicable
- Value calculated: (Qty × Unit Price × Discount%) / 100
- Line amount adjusts automatically
Tax Rate:
- Dropdown shows: Select GST, IGST 0%, 5%, 12%, 18%, 28%
- System auto-selects based on:
- Item's HSN code
- Supplier GST state vs billing state (CGST+SGST or IGST)
Tax Amount:
- Auto-calculated: (Amount after discount) × (Tax Rate / 100)
- Read-only field
Amount:
- Final line amount: Qty × Unit Price - Discount + Tax
- Auto-calculated, read-only
Action:
- Trash icon to delete line item
Add New Item:
- Click (+) icon at bottom to add more lines
- No limit on number of items per PO
Step 6: Configure Discount Settings
Discount Toggle:
- Choose discount application level:
- Discount at item level: Individual discounts per line
- Unit is: Applies unit-based discounts
Tax Exclusive/Inclusive:
- Toggle to set if prices are tax-inclusive or exclusive
- Affects tax calculation on line amounts
Step 7: Add Terms & Conditions
Standard Terms Auto-Populated:
- Order Acceptance: Supplier must confirm order acceptance within 48 hours. Non-acknowledgment will be treated as order rejection.
- Delivery Schedule: Goods must be delivered as per agreed timeline. Delays must be notified immediately with revised delivery date.
- Quality Standards: All items must meet agreed specifications. Defective items will be rejected.
- Invoicing: Invoice must reference this PO number and be submitted within 7 days of delivery.
How to Edit:
- Terms & Conditions section below line items
- Click in text area to modify
- Add company-specific clauses
- Include special instructions, warranties, penalties
Step 8: Attach Documents (Optional)
Documents Tab:
- Switch to Documents tab next to Items tab
- Click Select a file dropdown or (+) icon
- Upload files: Quotations, specifications, approvals
- Supported formats: PDF, Excel, Word, Images
- Files stored in Vault under Purchase Order folder
Step 9: Review Totals
Summary Section (Bottom Right):
- Sub Total: Sum of all line amounts before tax
- Taxable Amount: Amount on which tax calculated
- IGST/CGST+SGST: Tax breakdown
- Total Amount: Final PO value
Verify calculations before submitting.
Step 10: Save or Submit PO
Three Action Buttons:
Cancel:
- Discards all changes
- Returns to PO list view
- Use if starting over
Save:
- Saves PO as draft
- Can be edited later
- Not sent to supplier yet
- Useful for: Partial completion, pending approvals
Add:
- Finalizes and creates PO
- Generates PO number (if auto-numbering enabled)
- Changes status to "Open"
- Can be printed/emailed to supplier
- Ready for goods receipt and billing
Field Reference
Required Fields
| Field | Description | Validation |
|---|---|---|
| Supplier Name | Vendor from whom purchasing | Must exist in supplier master |
| PO Date | Order creation date | Cannot be future date |
| Expected Delivery Date | When goods expected | Should be after PO date |
| Line Items | What you're ordering | At least one item required |
Optional Fields
| Field | Purpose | When to Use |
|---|---|---|
| PO Expiry Date | Order validity period | For time-sensitive quotes |
| Department | Cost allocation | For budget tracking |
| Reference | External references | Quotation numbers, project codes |
| Documents | Supporting files | Quotations, specs, approvals |
Common Scenarios
Scenario 1: Creating PO from Purchase Request
- Navigate to approved Purchase Request
- Click Convert to PO button
- System pre-fills: Supplier, items, quantities, dates
- Verify prices and terms
- Add any additional items if needed
- Submit PO
Scenario 2: Multi-Item PO with Different Tax Rates
- Add first item with applicable GST rate
- Click (+) to add next item
- Select item with different HSN code
- System auto-applies correct tax rate
- Continue adding items
- Summary shows tax breakup by rate
Scenario 3: PO with Item-Level Discounts
- Add items to PO
- Keep "Discount at item level" selected
- Enter discount % for each eligible item
- Tax calculates on discounted amount
- Each line shows: Original price - Discount + Tax
Tips & Best Practices
Pro Tips
Always verify supplier's GST number before creating PO - incorrect GSTIN leads to tax calculation errors and ITC loss
Use reference field to note supplier's quotation number - makes bill matching easier and resolves pricing disputes
Set expected delivery date with 2-3 days buffer - accounts for transit delays and gives early warning for delayed orders
Save PO as draft if awaiting approvals or price confirmation - prevents premature order commitment
Troubleshooting
Issue: Supplier not found in search
- Ensure supplier created in supplier master
- Check if supplier status is Active
- Verify supplier name spelling
Issue: Wrong tax rate applied
- Check item's HSN code correctness
- Verify supplier's GST state
- Compare with billing entity's state
- IGST for inter-state, CGST+SGST for intra-state
Issue: Cannot edit PO after submission
- Check PO status - can only edit if "Open"
- If partially billed, create amendment PO
- Contact admin for permission issues
Need help? Contact support at support@bizconnekt.com