A purchase order (PO) is a document a buyer issues to a supplier to confirm an order, stating the items, quantity, price, delivery date and payment terms. Once the supplier accepts it, it is a binding commitment. When orders go out by email or phone instead, finance first hears of the spend at the invoice, after the budget is gone.
In OneFinOps, the Procurement Agent drafts the order from the vendor’s quotation and checks the budget before anyone approves it.
Key takeaways
- The buyer creates the PO before delivery; the invoice is checked against it.
- An Indian PO should carry both GSTINs, place of supply and HSN or SAC.
- AP pays only when the PO, goods receipt note (GRN) and invoice agree.
Purchase order format (India)
| Field | Why it matters |
|---|---|
| PO number and date | Unique reference the supplier quotes on challan and invoice |
| Buyer GSTIN and billing address | The supplier copies it onto the tax invoice; wrong GSTIN, no ITC |
| Supplier GSTIN, PAN, Udyam number | Registration, TDS, and the 45-day MSME payment limit |
| Place of supply | CGST plus SGST (same state) or IGST (different state) |
| Item, HSN or SAC, quantity, unit, rate | Checked against the GRN and the invoice |
| GST rate, terms and approval reference | Expected tax, payment terms and proof of approval |
Example. PO/2026-27/00145, 15 September 2026: an Ahmedabad company orders 25 chairs at ₹6,800 and 10 desks at ₹12,500 from a Pune manufacturer that is Udyam registered (small). The supply is inter-state, so IGST applies: ₹2,95,000 plus ₹53,100 (18% assumed), total ₹3,48,100. Payment must never go beyond 45 days from acceptance (section 15, MSMED Act, 2006).
What are the types of purchase order?
- Standard: item, quantity, price and date fixed, such as 40 laptops for new hires.
- Planned: dates tentative, such as 12,000 kg of resin in monthly releases.
- Blanket: quantity open with a value cap, such as stationery up to ₹3 lakh for FY 2026-27.
- Contract: supplier and terms only, such as annual maintenance.
Purchase order vs invoice vs GRN
The PO says what you asked for, the GRN says what you got, and the invoice says what you are asked to pay. You pay what all three agree on, through the 3-way match.
In the books a PO is a commitment, not a transaction: no journal entry is passed when you issue it, and no GST is paid on it. The full cycle is in procure to pay.
How OneFinOps handles purchase orders
The Procurement Agent reads the vendor’s quotation and drafts the order against the vendor record, cost centre and budget line. It checks budget, category policy and preferred vendor status, routes it to the right approver, then issues the order and records the commitment.
Some calls stay with people. An order above the approval limit goes to the budget holder, and a price above the awarded quote goes to the category buyer, with both figures shown.
Where accounting software first sees spend at the invoice, the control comes too late. In OneFinOps the order, receipt and invoice are one record.
See how the Procurement Agent works