Purchase Orders - Whiteboard Wednesday

What does a purchase order do? That is the big question that James Shores tackles in this episode of Whiteboard Wednesday. Purchase orders are contracts between you and your vendors, so if a dispute arises, it can be settled by going back to the purchase order and seeing if it was completely fulfilled as it specified.

Purchase orders can be forgotten or completely disregarded in some cases, but that leaves businesses vulnerable. It's much better to have everything written down in purchase orders to prevent misunderstandings and other errors that can cause problems in supply chain management and order management.

Fishbowl's Whiteboard Wednesday answers big inventory management questions in just a couple of minutes. Fishbowl is responsible for making the No. 1 manufacturing and warehouse management software for QuickBooks users.

[maximuswedgie]

The “cut a purchase order for everything” model is extremely inefficient. This is when companies can get in big trouble when they don’t understand the type of business that they are forcing this upon. If the office makes all of the workers cut a purchase order every time they go to Home Depot, or get gas, or guess how long do you need a rental, all of these things could be job costed, and or coded to overhead or the job number, by simply turning in the receipt to AP. Cutting purchase orders for materials and inventory is completely acceptable and encouraged.
Next time the office goes and buys coffee and forks for the break room, and toilet paper for the bathroom, they better ask for a purchase order.

[Meji]

Why would a company want to leave funds on PO when closing? Isn't that a legal liability?