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How a Purchase Order Helps You Get Paid on Time

A Handshake is Good, but a Formal Order is Better

You have pitched for the job and the customer agreed to your terms and prices. Many small businesses would now leave it there, accept the order verbally and get on with the job, invoice in the usual way and wait for the cash to arrive in their account.

However, when supplying to larger companies did you know that many will not pay an invoice that does not have one of their own Purchase Orders (PO) attached to it?

Although this may seem like just another pointless paperwork exercise to many SME’s we cannot stress how vital it is that you start to request this information and do not carry out any works until it has been received.

What is a PO number?

A purchase order is raised by the buyer and outlines to the supplier exactly what they are requesting be it goods or services, when they need it by,and the agreed price and payment terms.

The purchase order will have a unique reference number that enables it to be tracked by the buyer on their system so that when the invoice arrives they can easily match it up.

Why is it important?

A purchase order is a legally binding document between a supplier and a buyer, therefore once raised there should be no dispute over prices or payment terms.

Making sure the customer's PO number appears on your invoice will help ensure that it gets processed as quickly as possible. Larger companies will put aside any invoice that does not show this information, and don't expect them to call you to tell you! If you're not on top of your credit control, you could be waiting weeks for your invoice to get paid without even knowing that there is an issue with it.

We often get cases where a PO has not been given therefore the client has to go back to their contact /sales man they dealt with and request this information. This again can cause delay to your payment especially if the employee you dealt with is no longer with that company.

If you are struggling with getting paid on time then please contact us to find out how our services can help you.

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