Help with PO! (What is it exactly?)

[TommyGG]

I'm getting quite confused by this.

We have a new client who is currently making medium sized orders with us, and they want to make lots more orders in the future. They are part of a big, reputable and well known company.

They recently sent me an email, ending:

"Is there a way to setup a P.O with you ?"

I've never really dealt with PO's before. I googled it, and still don't really understand what they are and what I need to do to say to this client "Yes we can setup a PO with you".

Can anyone help explain this to me in simpleton terms, and what we would need to do to accept a PO from them?

Thanks!

 

[Scalloway]

It could be they want to set up an electronic purchase order system

http://www.finance.gov.au/publicati...e-procurement/electronic-purchase-orders.html

 

[TommyGG]

Could we tell them we're happy to accept PO's, and all they need to do is send the PO to us whenever they want and we'll deliver our product? And then every now and then we issue an invoice? Is this how it works?

 

[vvaannmmaann]

Option A



Option B

A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a purchase order to a supplier constitutes a legal offer to buy products or services. Acceptance of a purchase order by a seller usually forms a contract between the buyer and seller, so no contract exists until the purchase order is accepted. It is used to control the purchasing of products and services from external suppliers. (Wikipedia)

I imagine it's option B!

 

[paultnl]

Just make sure that accepting their PO does not negate your T&Cs

 

[webgeek]

Just remember to reference the PO on the invoice.

In simplest terms is their internal tracking of purchases, which then your invoice matches up against. Just a way to make their accountants / bookkeepers lives easier.

 

[TommyGG]

Right ok, so we can say we can accept PO's, and then we would expect them to issue the PO's to us. Is this correct?

 

[Philip Hoyle]

Are you sure that they're not asking for credit terms? I.e. for them to raise purchase orders with you where their T&Cs are, say, 60 days credit terms?

Just seems unusual to ask if you accept POs where purchase orders are quite routine and you wouldn't usually be asked if you accept them - as I say, unless it's to avoid paying upfront or to avoid adhering to your payment T&Cs.

 

[webgeek]

Yes, that's a good point. Some companies, under a PO will want net 30, net 60, etc, or other terms which give them float time before needing to pay it.

 

[TommyGG]

The reason is that they make payments of under $1k USD on their company credit card, and their credit card doesn't seem to be accepted by Paypal who are our primary payment provider.

They signed up with Paypal to make the payment this time, but they don't want to have to do it again in the future as it's not how they normally make small purchases.

They want a PO to simplify things, as far as I am aware as they want to place more orders in the future of <$1k. We're happy to give float time to this company, and trust them. Our stock comes at no expense to us (digital goods we have total ownership over), so even if payment cannot be retrieved it's no loss to us at the end of the day.

 

[GraemeL]

Hello Tommy,

If you go down the route of extending credit, there will be more admin and much more risk involved.

Suggest it would probably be worth your while to alter your own systems so that you can accept their card payments.


G

 

[TommyGG]

Hi GraemeL,

Altering our systems at this stage isn't really feasible, it's pretty complicated and would take several weeks to modify it to work with an alternative payment processor.