How to Create Purchase Orders in Xero: Ordering Made Easy

Creating and managing purchase orders can be a tedious process for many small businesses.

Luckily, Xero's online purchase order system makes ordering inventory and supplies incredibly straightforward.

This guide will walk through the entire purchase order workflow in Xero, from setting up the template and entering order details, to approving and processing purchase orders. You'll learn how to streamline ordering and integrate with inventory and billing for maximum efficiency.

Introduction to Purchase Orders in Xero

Creating purchase orders in Xero provides an efficient way to formally request and track inventory or services from suppliers. This integrated system offers several key benefits:

Understanding Purchase Orders in Xero

A purchase order in Xero allows you to:

• Formally request goods or services from a supplier
• Specify delivery dates, quantities, pricing etc.
• Track the status of the order
• Create a paper trail for accounting and inventory management

It enables organized procurement and gives you greater cash flow control.

The Advantages of Xero's Online Purchase Order System

Key advantages include:

• Streamlined ordering: Easily create digital POs to send to vendors
• Approval workflows: Set up review and approval rules to control spending
• Accounting integration: POs, inventory, and bills are connected in Xero
• Easier tracking: Check real-time PO status and details online

This simplifies ordering and provides transparency into purchasing.

Difference between Bill and Purchase Order in Xero

The key differences are:

• Purchase Order: A request to a supplier for goods/services
• Bill: A record of goods/services received and amount owed

A purchase order comes before a bill - you first order items with a PO, then record the receipt of items from the supplier with a bill later. The bill can reference details from the initial purchase order.

How do I create a purchase order in Xero?

To create a purchase order in Xero, follow these steps:

1. Navigate to the Purchases module and click "New Purchase Order"
2. Select the supplier you want to order from using the dropdown menu
3. Enter the date of the purchase order
4. Add products, quantities, description, unit price, account code, and tax rate
5. Click "Save Purchase Order"

Some tips for creating purchase orders efficiently:

• Make sure to select the correct supplier so that bills match up properly later
• Enter accurate quantities and descriptions to prevent mismatches with shipments
• Assign account codes to track expenses and run reports
• Set expected delivery dates so you can follow up if orders are late

Once saved, you can come back to the purchase order later to receive shipments against it when they arrive. You'll then be able to easily match the vendor bills to the purchase orders for payment.

Let me know if you have any other questions!

How do you make a simple purchase order?

Making a simple purchase order in Xero is easy with their user-friendly interface. Here are the key steps:

1. Choose a purchase order template in Xero that matches your needs. They have basic templates for standard orders or more advanced templates if you need things like approval workflows.

2. Add the issue date and order number. Xero will automatically track the purchase order numbers for you.

3. Input the supplier details including name, address, contact information. Make sure the billing details are complete.

4. Add the item details like description, quantity, unit price, account code, tax rate etc. You can add multiple line items.

5. Select a delivery address if different from the billing address.

6. Pick a delivery date that works for you and the supplier.

7. Save and send the purchase order to the supplier. You can print or email it directly from Xero.

That covers the basics of creating a simple purchase order! Xero makes it fast and easy to order inventory, materials, or services for your business. You can then match the purchase orders to bills later on. Let me know if you have any other questions!

How do I record a purchase order in Xero?

To record a purchase order in Xero, follow these simple steps:

1. Go to the Business menu and select Purchase Orders.
2. Click the + New Purchase Order button.
3. Complete the purchase order fields:
   • Supplier: Select the supplier you are purchasing from.
   • Date: Enter the date of the purchase order.
   • Delivery Date: Enter when you expect the order to arrive.
   • Item Code: Select or add item codes for the products ordered.
   • Description: Add details about the items.
   • Quantity: Enter the quantity ordered per line item.
   • Price: Input the agreed per unit price.
   • Account Code: Assign an account code.
4. Review and edit the purchase order as needed. You can:
   • Drag and drop lines to reorder them.
   • Add notes for the supplier.
   • Assign the purchase order to a specific project.
   • Change quantities or prices.
5. When done, click Approve to finalize the purchase order.

Once approved, the purchase order is sent to the supplier. When the order arrives, you can create a bill in Xero to match the purchase order for streamlined payment processing.

Recording purchase orders upfront makes ordering, receiving inventory, and paying bills easier in Xero. It also gives you better visibility into upcoming costs for financial planning.

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How do I set up a purchase order process?

Here are the key steps to set up an efficient purchase order process in Xero:

Create Purchase Requests

The first step is for staff to create purchase requests for items they need. This allows approvers to review requests before issuing a formal purchase order.

To create requests in Xero:

• Navigate to Purchases > Purchase Orders
• Click New Purchase Order
• Select "Purchase Request" as the order type
• Add details like supplier, items, quantities, and delivery address
• Submit the request for approval

Get Purchase Requisition Approval

Once a staff member submits a purchase request, it routes to approvers for review. Approvers can approve or reject requests.

• Set up user roles and rules for who can approve different request amounts
• Approvers receive email notifications to review pending requests
• They can add comments before approving or rejecting

Send Requests for Quotes

For larger purchases, you may want to collect quotes from multiple suppliers before ordering.

• Send RFQs to suppliers asking them to provide quotes
• Compare quotes on price, quality, and delivery time
• Select the best value supplier to order from

Create and Send Purchase Orders

Once a supplier is selected, create a formal purchase order in Xero to place the order.

• Navigate to Purchases > Purchase Orders
• Click New Purchase Order
• Select approved requests or manually enter order details
• Send the PO digitally to the supplier to fulfill

Receive Goods and Verify Invoices

Finally, receive the ordered goods or services. Confirm the accuracy of supplier invoices before paying.

• When items arrive, log them in Xero to record delivery
• Match invoices to POs and receipts to verify accuracy
• If all is accurate, approve invoices for payment

Following this streamlined procurement process in Xero saves time, reduces costs, and improves transparency.

How to Create Purchase Orders in Xero

Creating purchase orders in Xero allows businesses to easily manage and track their ordering and procurement processes. This guide will walk through the key steps to create purchase orders, review and submit them for approval, assign them to projects, and leverage Xero's inventory management features.

Accessing the Purchase Order Template in Xero

To start a new purchase order in Xero:

1. Log in to your Xero account and navigate to Accounts > Purchase Orders
2. Click the New Purchase Order button
3. Select the appropriate Supplier from the drop-down list
4. Choose a Purchase Order template if you have any set up to auto-populate certain details
5. Click OK to open the purchase order form

This will open up a draft purchase order with basic header details filled in, ready for you to add line items.

Filling Out Purchase Order Details

In the purchase order form, you can enter key details including:

• Supplier Details: Name, contact info, delivery address
• Inventory Items: Select products/services, quantities needed, unit prices
• Arrival Date: Expected delivery date for the full order
• Delivery Address: Where the order should be shipped
• Notes: Any special instructions or requests

As you enter items, Xero can automatically pull in details like descriptions, account codes, and tax rates if you have set up item codes. This helps streamline the data entry process.

You can also assign purchase orders to specific projects if you use Xero's project tracking tools. This enables you to track costs by project.

Reviewing and Submitting Your Purchase Order

Before submitting the purchase order, carefully review all entered details for accuracy. You can save drafts at any time or go back and modify orders if needed.

When ready, click Approve to submit the purchase order through Xero's approval process (if enabled) or directly send the order to your vendor.

Approved orders become active purchase orders in Xero for continuing tracking and management.

Assigning Projects and Inventory Management

If you use Xero's project tracking and inventory management tools, you can leverage purchase orders to:

• Assign costs to specific projects
• Automatically update inventory quantities on order/on hand
• Generate purchase orders for reorders based on stock levels
• Create sales invoices from purchase orders

Connecting purchase orders into these other systems helps streamline wider business processes and provide end-to-end visibility over orders.

This covers the essential process for creating and managing purchase orders within Xero to simplify ordering and procurement tasks. Reach out for any questions!

Navigating the Purchase Order Approval Process in Xero

Initiating the Approval Process for Purchase Orders

The purchase order approval process in Xero begins when a user with the appropriate permissions creates a new purchase order. Upon saving the purchase order, Xero automatically sets the status to "Awaiting Approval."

To initiate approval, the following criteria must be met:

• The purchase order must have a supplier selected
• At least one line item must be added with details like quantity, unit price etc.
• The purchase order must be assigned to a valid nominal code

Once these requirements are fulfilled, the purchase order enters the approval workflow.

User Role Access and Permissions

Only certain Xero user roles can approve purchase orders:

• Organization Admins - Have full access to approve
• Purchases Admins - Can approve orders under a specified spend threshold
• Purchases Only Users - Can create but not approve purchase orders

The spend approval limits for Purchases Admins can be configured under User Permissions. Organization Admins have unlimited approval authority.

How to Find and Approve Existing Orders

To approve orders awaiting permission:

1. Go to Accounting > Purchases > Purchase Orders
2. Filter by status "Awaiting Approval"
3. Click on a purchase order to review the details
4. If satisfactory, click "Approve Order"
5. Enter admin credentials when prompted

Once approved, the purchase order status updates to "Approved." Rejected orders can be edited and resubmitted for approval.

Making Adjustments Before Approval

If details on the purchase order need correction before approval, users can:

• Change the quantity or unit price of an item
• Add or remove items
• Update the supplier, delivery address etc.
• Assign the order to a different nominal code

After making adjustments, save the purchase order. The status returns to "Awaiting Approval" for the next reviewer.

Processing Purchase Orders and Invoices in Xero

How to Process the Bill for a Purchase Order

When you receive the goods or services ordered through a purchase order in Xero, it's time to process the bill. Here are the steps:

1. Go to the Bills section in Xero and click New Bill.
2. Select the supplier the purchase order was created for.
3. Click Linked Purchase Order and select the relevant purchase order from the drop-down list. This will automatically populate the bill with details like quantity, description etc.
4. Review and edit the bill as needed - you can update the quantity if partial delivery was received or add a reference number.
5. Click Approve to process the bill for payment.

Processing bills from purchase orders ensures accuracy as details like amounts and quantities flow through automatically. It also enables easy tracking from ordering to payment.

Creating a Sales Invoice from a Purchase Order

For inventory type items ordered via a purchase order, you can save time by copying the details to a sales invoice for billing customers. Here is the process:

1. Go to the Purchase Orders section and open the relevant order.
2. Click the More button next to the line item and select Copy to New Sales Invoice.
3. In the pop-up, edit the quantity if needed and select the customer to bill.
4. Click Copy to Invoice. This will open a new sales invoice with the order details.
5. Make any other modifications to the invoice and click Approve to bill your customer.

This quick method reduces repetitive data entry and ensures accuracy when billing for items already received into inventory.

Integrating Purchase Orders with Xero's Inventory Management

You can connect purchase orders to inventory items in Xero for better stock control. When creating or editing a purchase order:

• Select or create an Item Code for each line to link it to an inventory item.
• Enter the expected Arrival Date. This updates stock on hand when goods are received.
• Set the Delivery Address where stock will be delivered.

On the purchase order approval, the stock on hand quantity will update automatically. This ensures you have an accurate picture of inventory levels at every stage of the order and delivery process.

Integrating purchase orders with inventory items enables efficient end-to-end tracking of stock quantities within Xero.

Conclusion: Streamlining Ordering with Xero's Purchase Order Features

Xero's purchase order features offer an efficient system to streamline ordering and procurement for businesses. Here is a summary of the key benefits:

Simplicity

• Intuitive interface to quickly create detailed purchase orders
• Pre-built templates make ordering consistent and fast
• Easy to customize purchase orders with items, quantities, delivery dates etc.

Approval Workflow

• Set up approval rules to control purchasing decisions
• Review pending orders before approving or rejecting
• Ensure compliance with procurement policies

Integration

• Seamlessly connect purchase orders to inventory, billing and reporting
• Automate order status updates between systems
• Reduce manual work reconciling orders across finance

Reporting

• One place to track all purchase orders and related invoices
• Analyze spending with drill-down reports by supplier, item etc.
• Identify cost savings opportunities

With real-time visibility into purchasing and integrated approvals, Xero delivers the speed and control needed for efficient ordering. Streamlining procurement ultimately saves time and money for growing businesses.

Related posts

• How to Manage Inventory in Xero: A Guide for Stock Control
• How to Use Xero for E-commerce: Streamlining Online Sales
• How to Manage Bills in Xero: Streamlining Accounts Payable
• How to Process Payments in Xero: Efficient Transaction Handling