Streamline Your Finances with Our Purchase Order Invoice Template for NPOs

Purchase order invoice template for NPOs

did you know that one silly stupid mistake on a purchase order can cost your organization hundreds of thousands of dollars if not more not something that will make your bosses really happy to make sure this doesn't happen to you we created this video which explains what purchase orders are and the different kinds of purchase orders make sure you stick around until the end where we share that one mistake that many make with purchase orders when they get to AP and it's really easy to avoid if you know what you're doing hey guys I'm Mary schaer founder of AP now your One-Stop shop for Cutting Edge business intelligence if you work in manager have responsibility for the accounts payable Andor payment function so let's get started what is a purchase order a purchase order is a legally binding document created by a buyer and presented to a seller purchasing and accounting professionals frequently refer to purchase orders using the shorthand abbreviation po each po or purchase order should have a unique number associated with it and this is frequently refer to as the PO number all righty so how does a purchase order work a purchase order should include all the details related to the order so there can be no confusion this might include an item number or the name of the good um and any other defining details such as color it should also include the quantity the payment terms and any delivery details that might be needed once the purchase order is accepted if the documents it documents the transaction as agreed by the buyer and the seller what are the four kinds of purchase orders um there are a number of different purchase or kinds of purchase orders and we're going to take a look at them all purchase order type number one is referred to as the standard purchase order this is the one that we are most familiar with um the standard purchase order and typically it is a oneoff and is for a one-time purchase even organizations that do a lot of businesses together will use a standard will use standard purchase orders alth they they they will have negotiated standard terms ahead of time and these will automatically be included on the purchase orders they don't have to reinvent the wheel every time they get started purchase order type number two it's called a contract purchase order and these are agreements used to create ongoing commercial relationships between a buyer and a seller they spell out the terms and condition include and include things like payment terms delivery terms who pays for the freight Etc however and this is the big difference no no products or orders are specified at that purchase order type number three are called standing purchase orders and these are used when the same amount of an item is ordered repeatedly at a given interval say weekly or monthly so an example might be a coffee shop who orders 100 pounds of coffee beans each week and every week that order just repeats okay so it's a standing purchase order and in this case the same purchase order number is used for each of these purchases and it goes without saying if you're working in accounts payable and you're dealing with this you need to be very careful that you don't end up paying uh for something twice okay and our our fourth time type of purchase order is called a blanket purchase order and these These are similar to standing purchase orders except typically is a c a cap the purchase order might be good for $100,000 and when that $100,000 limit is met is met then the purchase order either has to be replenished or a new one issued um in these cases orders are not automatic it's not every week or every month but whenever the buyer needs more Goods they notify the seller and the seller uh will ship the goods and then when they bill it they bill it against the purchase order the uh meanwhile the buyer needs to track well actually both folks need to track the purchase order uh to see what to see what's left um against it and then of course when it runs out if you will then they need to um you know issue a new one or replenish it okay now to be blunt about it most of you watching this will primarily use that standard uh purchase audit type but the others do have their place in in industry in business and they are used um I don't want to say frequently but they are used it's not uncommon let's leave it at that okay now we before we get to that one mistake that has literally cost organizations millions of dollars I'd like to share that we have over 300 videos with in our AP now library with new accounts payable and payment videos being added every Tuesday and Thursday and we're adding short tips on some other days occasionally on Saturdays we have a little word fun please check out the rest of this channel after you finish this video okay so what is that purchase order mistake that costs Millions after a payment is made regardless of whether you pay with a check a card a wire transfer an a that purchase order should be extinguished or closed out immediately I can't say this um loud enough immediately it's that simple don't wait for the end of the week or the end of the month and then you can do them all at once because it might make it a little easier for you do it immediately I can't stress this enough why am I making such a big deal about this why is this so critical because if you don't close it out immediately and a second invoice shows up um and you know this has become a huge problem today in most accounts payable departments there is a decent chance that when that second invoice shows up and the purchase order is still outstanding it will get paid and as many of you listening to this know sub suppliers rarely return that second payment unless you find it and ask for that money back and that's more resources uh required on your part to track it down and figure it out now um as I've alluded to every organization is fighting the headaches of vendors sending duplicate copies of invoices in fact research AT AP now reveals that about 25% of all invoices received in accounts payable departments everywhere are duplicate um that's a lot of extra work weeding them out and inevitably that's a lot of chances for you to make a duplicate payment and a few of them will slip through that's why we recently did a broadcast called eliminating duplicate invoice best practices so that you can um Implement these best practices in your organization and ideally have a minimal number of those second invoices getting through um which you have to waste valuable resources on pressing them a link to that video will appear momentarily on your screen on YouTube and is in the show notes below as always we appreciate your thumbs up your comments your shares and your subscrib