Automating the Purchase Order Process in NetSuite
Purchase orders are important pieces of information recorded in the NetSuite ERP system. They impact departments across the business, including procurement, sales, and accounting. Purchase orders are not required at every organization but for those that often purchase goods and services, they streamline the process and provide a trail for audits.
What is a purchase order in NetSuite?
A purchase order is used to record items that are received, expected to be received, or yet to be delivered. Purchase orders also help track items that remain outstanding. The document is issued between a buyer and seller and it authorizes the purchase of goods and/or services. The document is legally binding and formalizes important details on what was ordered, such as pricing. It is originally created and issued by a buyer who needs to ensure they receive exactly what they order. The document is sent to a vendor and it outlines what the order should contain and when it is needed. Purchase orders can be created individually or in bulk. The time frame of a purchase order can be however long it takes for an order to be fulfilled.
A purchase order is required for audit purposes in order to show that an order that was made was approved. Purchase orders are also needed for times when the price of a good or service goes up between the time the contract was signed and when the item was delivered.
Line Items that Purchase Orders Typically Include:
- Item Description/SKU/Quantity
- Price of the Item
- Subtotal of the Order, Plus Taxes
- Purchase Order Number
- Payment Due Date
- Contact Information for the Seller/Buyer
Types of Purchase Orders
Standard Purchase Orders (PO): These are created when goods/services details, price, quantity, and specifications are known. These are typically one-off orders with defined payment, location, and delivery timelines.
Blanket Purchase Orders (BPO) or Planned Purchase Orders (PPO): This is the preferred method of placing orders that require multiple payments over a defined period. BPOs could be used for service contracts or standing orders.
Differences between sales orders and purchase orders
Purchase orders kick off the purchasing process with a particular supplier. A sales order is typically created by the supplier after receiving a purchase order. As the items on the purchase order get fulfilled invoices are created by the supplier and sent to the purchaser. The invoice is linked to the sales order and a single sales order can have multiple invoices depending on the timing of the shipments.
Differences between bills and purchase orders
The difference between a bill and a purchase order is that a purchase order is issued by the purchaser to the vendor. The bill is issued by the vendor to the purchaser after the purchase order is fulfilled. A bill is also referred to as an invoice and when the purchaser receives the invoice from the vendor they typically enter it as a “vendor bill” in their ERP. Bills are not always dependent on having a purchase order first. It depends on the policy of the organizations.
Options for Creating Purchase Orders
Creating Purchase Orders in NetSuite
NetSuite offers the ability to create purchase orders directly from their UI. The only potential drawback is that entering purchase orders this way can be time-consuming, especially if you have a large number of POs to process, complex data to input, or POs with many lines of data.
CSV Import of Purchase Orders to NetSuite
CSV import is another option for entering purchase orders into NetSuite but this can also be manual and take a significant amount of time. Two imports would be required to complete this process, one for purchase orders and one for the related vendor bill. Each individual import would need to have an external ID mapped. The external ID on the vendor bill needs to match the external ID imported on the associated purchase order.
Creating Purchase Orders in NetSuite with CloudExtend
CloudExtend allows users to create purchase orders right in Excel. The template to upload the purchase order only needs to be created one time, making the process much easier and faster than manually uploading individual purchase orders each time they are needed. You can learn more about how to create purchase orders with CloudExtend here.
Learn how POS Supply saved time creating Purchase Orders with CloudExtend.