Learn What a PO Number Is & How to Create a Purchase Order

One of the vital components of acquiring goods and services within an organization is establishing a PO Number system. A PO Number or purchase order number is an alphanumeric code assigned to a specific transaction. Using PO numbers creates a paper trail between buyer and seller and makes it much easier to track the status of a particular transaction when both parties may have many open transactions both together and with other parties.


Documenting all business transactions is vital to the success of an organization. When you order something your business needs, you want to be sure you receive it at the agreed-upon price. Thus, having a unique identifier helps avoid confusion when an invoice arrives. 


The purchase order number saves time and resources when tracking down invoices and shipments. 


In this article, you will learn more about the aspects and processes of a PO Number. In the end, you will learn how to create a purchase order number system for your organization. 


Purpose and Function of PO Numbers


Buyers send a purchase order to vendors or suppliers at the beginning of a transaction. The purchases are assigned a PO Number, which is usually sequential or incremented up from the last purchase order issued. This is referenced throughout the entire transaction and even included on the packing slip


The purchase order number is used to reference the purchase order, which contains the list of goods or services desired by the buyer. 


Other important information, including desired delivery date and payment terms, is often included. Hence, it gives anyone in both companies a solid reference point to track transactions. 


By referencing purchase orders, a business can learn a lot about the volume and type of products ordered over time. You can analyze a company’s cash flow and interpret which departments buy or sell the most, for example.


PO Number Process


The buyer always initiates the purchase order and assigns the PO number.


• First, an employee gains approval for a purchasing request. This approval kicks off a PO Number assignment. 

• Next, the order is placed with another company or vendor via submission of the approved purchase order. The vendor records the PO number and products or services requested. Eventually, it becomes prepped for packing and shipping. 

• The goods or services are delivered and/or accomplished along with the invoice, which should match the purchase order. The invoice typically contains the purchase order for easy matching. 

• Finally, with an easy-to-find PO number on a vendor’s invoice, it’s easy to expedite the payment.


How to Create a PO Number


Any business can create a purchase order template and assign a numbering system. 


However, licensing an accounting and financial system will save a lot of time and effort. Purchase order number generation is within FINSYNC’s cloud-based accounting software. The system auto-generates and applies a purchase order number for all purchase orders created. Then, route them for sign-off. All purchase orders are stored sequentially for easy reference.


If your business does not use professional accounting software, you can create your own PO Number template. These codes must be in alphanumeric format with or without dashes. Most companies will use letter and number combinations to represent locations, vendor names, and dates.


Ensure enough product or service details so the seller quickly understands how to fulfill the request—the less back and forth, the better. 




It doesn’t matter if you are the business or the vendor; having a purchase order number makes things easier for everyone. 


On the customer side, a buyer may have an issue with an order placed five months ago. By using the PO number, tracking the service order and invoice will be much simpler. 


Integrating a PO Numbering system prevents a business from having duplicate orders, incorrect filings, and other common accounting errors. 


Learning all the forms and tools you need to prosper can be overwhelming when you first start a business. The best outcome is to incorporate some form of purchase order tracking system. Get an excellent handle on your small business finances straight out of the gate.


How FINSYNC Can Help


FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.

Helping small businesses is our core mission at FINSYNC.

Centralize your accounting, payroll, and cash flow management on our all-in-one platform.

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