Understanding Purchase Orders

This document provides an overview of how purchase orders work in Zoho ERP. It explains the purpose of purchase orders, key benefits, and their lifecycle.

What is a purchase order?

A purchase order is an official document that a customer issues a vendor indicating information about the items they want to buy, their quantities, and their prices.

Purchase orders serve as a legally recognized record of the purchase and helps organizations track commitments before the actual expense or bill is recorded.

In the Purchase Orders module, you can:

• Create and send a purchase order to your vendors when you are in need of a product.
• Convert the purchase order into a bill after you receive an invoice for your purchase.
• Set conditions that determine when a purchase order is marked as closed.

Key Benefits of Using Purchase Orders

• Improves control over organizational spending
• Ensures purchases are pre-approved and policy-compliant
• Reduces billing errors through PO-to-bill matching
• Maintains a clear audit trail from request to payment
• Strengthens vendor communication and accountability

Lifecycle of a Purchase Order

The life cycle of a purchase order shows the stages a purchase order goes through from the time it is raised until it is converted to a bill or payment has been recorded. A purchase order is typically created as a draft, converted to open, and then partially or fully paid.

Configure Preferences

You can configure the preferences of the Purchase Orders module based on business requirements. Read our help document on Purchase Orders Preferences to learn more.