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Purchase order number:
Purchase order date:
Payment terms: days
Purchaser:
Delivery address:
Thank you for your custom.
Telephone number:
Provide catering services to businesses or private customers
Sell or purchase goods as a business or an individual
Enter into an agreement for a marketing or referral program
Set out the details for the provision of services for a project
This Purchase Order template covers:
the sale and purchase of goods or services
the description of what is to be bought
the names and contact details of the buyer and seller
the price, delivery fees and any VAT payable
A Purchase Order forms part of the overall contract for the sale of goods or services, explicitly stating what has been requested by the customer or purchaser and setting out additional terms. It helps the buyer by ensuring that all costs are specified in advance, and it also serves as proof of what has been ordered for the seller. As such, it can be used by both businesses during a transaction.
As well as serving as proof of intentions, Purchase Orders can streamline purchasing processes and help ensure that accurate records are kept for accounting and auditing purposes.
Purchase Orders are legally binding if the seller and purchaser both accept the order. Provided a Purchase Order is accepted and becomes part of a valid contract (eg a contract for the provision of goods/services and for payment in return), it will bind both parties.
Use this Purchase Order template to learn how to write a Purchase Order. As a minimum, your Purchase Order should include:
the words 'purchase order', which should be clearly displayed
a unique Purchase Order identification number (or ‘PO identification number’)
the date the Purchase Order was created
agreed dates for delivery of goods and/or services
the business name (this is the individual’s name if it is a sole trader) and contact details of both vendor and purchaser
a description of the goods or services ordered and individual costs/fees
the total cost, any agreed delivery fees, and VAT if applicable, and
any agreed payment terms
A Purchase Order identification number is a specific identification number (or reference code) that is assigned to the Purchase Order in question. By assigning an identification number, you ensure that the Purchase Order can be tracked and easily referenced throughout the entire order process and if any issues arise later on.
A Purchase Order requests the provision of specific goods or services. An Invoice requests payment for the supply of these goods or services.
Purchase Orders should always precede invoices. A Purchase Order may be used as the basis of an invoice, and invoices should always reflect the details contained in a Purchase Order (in particular the agreed fees/amounts). Many purchasers require the relevant Purchase Order number to be included in any invoice in order to streamline their processing and ensure that everything tallies up.
For more information, read Invoicing.
A Purchase Order can include a note of any required payment period (if one has been agreed) or a preferred payment period if one was not discussed (although this may not be binding). The standard payment period for most businesses is within 30 calendar days of receipt of an invoice. After the payment window ends, any payments are considered late (unless otherwise agreed). Interest may then be charged and a statutory demand can be made.
If you only deal with a handful of contractors and prefer to keep things informal, you might choose to omit Purchase Orders from your transactions. However, some contractors will demand a Purchase Order before starting work. Also, having a formal contracting system in place, which includes Purchase Orders, can help to prove the status of contractors - so they are not classified as employees for IR35 purposes. For more information, read IR35 status determination.
Making a Purchase Order online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your Purchase Order you will need the following information:
Seller details
What is the seller’s legal structure?
Will the Purchase Order be printed on headed paper that includes the seller’s name and address?
If so, what is the seller’s name?
If not, what is the seller’s name and address?
What is the seller’s telephone number?
Will the Purchase Order:
Set out the seller’s email address? If so, what is the email address?
Set out the seller’s website address? If so, what is the website URL?
Purchaser details
The purchaser’s details (eg legal structure, name and address).
Is the delivery address the same as the purchaser's address?
If not, what is the purchaser’s delivery address?
Purchase Order details
What is the Purchase Order number?
What is the Purchase Order date?
What are the details of the items being sold (including descriptions, quantities and prices)?
Does the seller want to apply a discount to the total price? If so, what is the discount?
Does the seller charge VAT? If so, what is the seller’s VAT number?
Payment
How many days does the purchaser have to fully pay for the order?
By making a Purchase Order you confirm an order of goods or services. To do that, this Purchase Order covers:
Seller details
The Purchase Order starts by setting out the seller’s name and address. This will only be displayed if the Purchase Order will not be printed on headed paper that includes the seller’s name and address.
Details of the Purchase Order
The Purchase Order is addressed to the purchaser and sets out the delivery address for the order. The body of the Purchase Order sets out the details that all Purchase Orders should include, such as the PO number, date, and payment terms. It also provides:
a description and specification of the items being sold
the unit price
the quantity
the sub-total (excluding VAT)
the applicable VAT rate
the discount percentage and the discount amount (if applicable)
the sub-total and the amount of VAT payable (if applicable)
the purchase total
If you want your Purchase Order to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Purchase Order for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
Make sure your Purchase Order sets out the correct rate of VAT
Value Added Tax (VAT) is payable on most goods and services at a rate of 20%. However, certain goods and services attract VAT at different rates. A reduced rate of 5% is charged for some goods and services (eg children’s car seats), while a zero rate (0%) is charged for others (eg books). Before making and sending your Purchase Order, you should check the Government’s guidance on different goods and services.
Follow up your Purchase Order with an invoice
While Purchase Orders are an important part of the life cycle of a contract, providing details about orders, they should be followed up with Invoices. An Invoice is the document that formally requests payment and sets out how this can be made. For more information, read the FAQ ‘How does a Purchase Order differ from an invoice?’ and Invoicing.
Understand when to seek advice from a lawyer
for more information about drafting your terms and conditions if you are a purchaser or seller
if you have problems identifying the terms of a contract where there are competing terms and conditions on the back of orders, order acknowledgements, and/or delivery notes
for advice on international sales
for advice, if you charge different rates of VAT or different discounts across different products
if this document doesn’t meet your specific needs
