Creating Purchase Orders in Xero Made Easy

Creating and managing purchase orders is a tedious process that most businesses struggle with.

Luckily, Xero offers a streamlined system to simplify your procurement workflows with electronic purchase orders.

In this post, you'll learn how to easily create, approve, and track purchase orders within Xero to maximize efficiency across your purchasing operations.

Simplifying Procurement Processes with Xero Purchase Orders

Xero's online accounting software offers businesses an efficient way to manage procurement through digital purchase orders. By streamlining this critical process, Xero enables organizations to reduce costs, improve accuracy, and simplify approvals.

Understanding the Xero Purchase Order System

A purchase order allows a business to formally communicate its intent to buy goods or services from a vendor. Xero centralizes and automates this process with features like:

• User role-based access controls for creating and approving orders
• Pre-populated purchase order templates
• Automatic PO number generation
• Inventory integration to track stock levels
• Digital storage and organization of all documents

This eliminates manual paperwork and ensures orders flow smoothly between finance, procurement, and inventory teams.

Benefits of Digitizing Purchase Orders in Xero

Switching from paper to electronic purchase orders in Xero provides multiple advantages:

• Faster approval routing: Orders can be automatically sent to managers for digital authorization.
• Fewer errors: Removing manual data entry prevents typos and mistakes.
• Better reporting: All orders stored electronically enable real-time tracking of spending.
• Enhanced compliance: Digital audit trails improve financial control.
• Easier invoice reconciliation: POs link directly to bills for simpler processing.

By streamlining this critical business process, Xero's purchase order system saves time, reduces costs, and enables organizations to scale efficiently. The software transforms procurement through automation and integration.

Can you generate purchase orders in Xero?

Yes, Xero has robust purchase order functionality that allows users to easily generate, manage, and track purchase orders.

To create a purchase order in Xero:

• Find and open the job you want to create the purchase order for.
• Select the Financial tab, then click New Purchase Order.
• Select the Supplier and complete the purchase order details such as:
  • Item codes
  • Quantities
  • Prices
  • Tax rates
• Select the checkbox next to any unordered costs from the job you want to include in the purchase order. This will automatically populate those costs.
• Review and submit the purchase order.

Once submitted, the purchase order is stored electronically in Xero for approval routing, purchasing, and payment. Users with appropriate permissions can approve purchase orders, which triggers order fulfillment.

When goods/services on the PO are received, users can process bills against the purchase order to manage accounts payable. This links everything together from ordering to payment.

Key benefits of Xero's purchase order system:

• Streamlines procurement processes
• Enables approval workflows
• Integrates with inventory, accounts payable, reporting
• Promotes accountability with audit trails
• Works across multiple projects and suppliers

So in summary - yes, Xero has robust features to create, manage, and fulfill purchase orders for streamlining procurement processes.

How do you make a simple purchase order?

Making a simple purchase order in Xero is straightforward. Here are the key steps:

1. Choose a purchase order template in Xero that matches your needs. There are pre-built templates for common purchase order scenarios.

2. Add key details about the purchase order:

   • Issue Date
   • Expected Delivery Date
   • Supplier Details (name, address, contact info)
   • Purchase Order Number - Xero can generate this automatically
   • Purchase Order Amount
   • Tax Details

3. Provide information on the items being purchased:

   • Item Descriptions
   • Quantity
   • Unit Price
   • Tax Code
   • Account Code

4. Add any additional notes or instructions for the supplier

5. Submit the purchase order for approval if required by your business workflow

6. Once approved, the purchase order is sent to the supplier. It will also be saved and accessible within Xero for your records.

The key benefits of creating purchase orders in Xero include:

• Streamlined procurement process from purchase request to payment
• Simple approval workflows
• Integration with inventory management and bill payment
• Complete audit trail and reporting

By leveraging Xero's purchase order templates and workflows, you can simplify your procurement processes.

Can Xero issue purchase order?

Xero has robust purchase order functionality that allows users to easily create and issue purchase orders within the system.

To issue a purchase order in Xero:

• Navigate to the Purchases > Drafts tab in the Business menu
• Locate the draft purchase order you want to issue and click on the purchase order number
• Hover over the Issue button and select Issue or Issue & Receipt

When you issue a purchase order in Xero, you have the option to also print or receipt the order at the same time. Issuing the purchase order electronically stores it and makes it available to the supplier.

Once issued, the purchase order becomes an active part of your Procurement Process in Xero. From there, you can continue the process by receiving the order, entering the supplier bill, and approving payment. Xero links all these transactions together for easy tracking and reporting.

Issuing purchase orders through Xero creates an organized system to manage your procurement processes from end-to-end. It saves time, provides clarity to suppliers, and gives you control and visibility over purchasing in your business.

How do you implement a purchase order process?

Here are the key steps to implement a purchase order process in Xero:

Set up purchase orders in Xero

First, you need to enable purchase orders in Xero. Go to Settings > General Settings and check the box next to "Use purchase orders". This will activate the purchase orders module.

Next, set up who can create and approve purchase orders under User permissions. Give the appropriate staff roles access to manage purchases.

Create a purchase order

When you're ready to order inventory or services, navigate to Accounts > Purchase Orders and click "Add Purchase Order".

Fill in the supplier details, items/services being purchased, quantities, cost per unit, delivery address, etc. Xero will automatically create a PO number.

If you need approval before sending the PO, change the status to "Awaiting Approval". Assign approvers under Related > Approvers. They'll be notified to review and approve the order.

Send and receive the purchase order

Once finalized, change the status to "Approved" and click "Email Purchase Order" to send to the supplier. The PO is stored electronically for your records.

When you receive the ordered goods/services, change the status to "Closed". Later, when you receive the supplier invoice, you can quickly compare it back to the purchase order for accuracy.

Pay supplier invoices

Navigate to Accounts > Pay Bills to process supplier invoices. Select the bill and click "Match Purchase Order" to verify it against the original PO.

If all is accurate, change the bill status to "Approved" and click "Pay Selected Bills" to pay the vendor. The system will automatically update the purchase order as paid.

Following these key steps will help you establish an efficient procurement process with clear accountability, oversight, and documentation through every stage of the purchasing workflow.

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Getting Started with Purchase Orders in Xero

Navigating the Xero Dashboard for Purchase Order Creation

To create a purchase order in Xero, first log into your Xero account and click on "Purchases" in the left sidebar. This will open up the purchases dashboard. Across the top you will see tabs for Bills, Purchase Orders, and Recurring Bills. Click on "Purchase Orders" to access the purchase order creation and management screen.

From here you can view past purchase orders, copy old orders to quickly create new ones, import orders, or create a brand new order from scratch by clicking the "New Purchase Order" button. This is where you will begin the purchase order creation process.

Setting Up Item Codes for Efficient Inventory Management

Before creating purchase orders, it can be helpful to set up item codes for the inventory your business purchases on a regular basis. This allows you to quickly select items from a dropdown when making orders rather than having to manually enter details each time.

To set up item codes, go to Settings > Items. Here you can add new items, assign them codes and descriptions, track their cost, define their tax status, and view reporting history.

Using consistent item codes makes the purchase order approval and inventory management processes much smoother.

Defining User Role Access to Purchase Orders

To ensure proper oversight into spending, Xero allows you to configure user permissions around purchase orders. Under Settings > Users you can select specific roles like Purchase Orders Only, Purchases and Purchase Orders, or customize even more advanced permissions.

For example, you may want purchase creators and managers to generate orders but require the business owner to review and approve them over a certain amount. The customizable roles allow for this level of control.

Customizing the Xero Purchase Order Template

Under Settings > Purchase Order Settings you have the ability to customize your Xero purchase order template to match your business' branding and processes.

You can define the logo, color theme, company details, payment terms, delivery details, and custom form notes that should appear on all new purchase orders. This keeps consistency across the procurement process and ensures all necessary information is captured at the ordering stage.

Automatically Creating a Unique PO Number

As you create new purchase orders, Xero can automatically number them in sequence so each individual order has a unique identifier. This keeps purchase records organized, supports order tracking/status, and provides an easy reference point when processing orders.

To enable auto-numbering, check the box next to "Automatically create next PO number" when creating or editing the purchase order settings. Xero will append an auto-incrementing PO number to new orders as they are generated.

Following this getting started guide will help you quickly begin leveraging Xero's robust purchase order management features to simplify your procurement workflows. Be sure to also explore reporting capabilities and integrations with other business systems down the line as your needs grow. Let Xero take care of the busywork so you can focus on running your business.

Creating and Managing Purchase Orders in Xero

Creating accurate and compliant purchase orders in Xero streamlines procurement processes and ensures proper tracking of expenses. This guide outlines the key steps for entering purchase order details, assigning projects, getting approvals, processing bills, and more.

Entering Essential Details: Supplier, Inventory, and Delivery Address

To start a new purchase order in Xero:

• Select "+ New" and choose "Purchase Order"
• Enter the supplier name and contact details for proper communication
• Add any relevant inventory/item codes to link expenses
• Input the accurate delivery address for shipment

Capturing these essential details upfront ensures the purchase order contains the required information to proceed.

Assigning Projects to Track Purchase Order Expenses

Xero enables users to assign projects to purchase orders for better expense monitoring. Here's how:

• When creating the purchase order, select "Assign to Project"
• Choose the relevant project from the drop-down list
• Expenses from this purchase order will be tracked against that project specifically

Assigning projects creates transparency into how much is being spent on which initiatives.

Review and Approve the Purchase Order

Before sending the purchase order to the supplier, it's important to thoroughly review and formally approve it. Follow these steps:

• The creator or assigned approver carefully vets the order details
• If no changes are required, they mark the order as "Approved"
• This locks down the record and formally sends the PO to the supplier

This approval process ensures accuracy before procurement proceeds.

Processing the Bill: From Purchase Order to Payment

Once the goods/services are received, the supplier bill needs to be entered and paid in Xero:

• The "Bills" section links supplier bills to related purchase orders
• Users can quickly convert the PO to a bill for streamlined processing
• Finally, submitting the bill through Pay Bills settles the invoice

This ties the full procurement cycle together - from order through payment.

How to Copy an Order to a Sales Invoice in Xero

If goods are being purchased for resale to customers, Xero simplifies the process:

• Users can select "Copy to Sales Invoice" from the purchase order
• This quickly pre-populates a new invoice with the PO details
• The invoice can then be sent directly to the buying customer

Copying orders to invoices automatically transfers key information, saving time and effort.

Following these best practices for managing purchase orders will lead to greater efficiency, transparency, and control over procurement processes in Xero. The system ties the full cycle together - from initial order through final payment - while enabling detailed expense tracking against projects or inventory.

Maintaining a Clean Purchase Order Ledger

Keeping accurate and up-to-date purchase order records in Xero can simplify procurement processes and provide clarity into spending. Here are some best practices:

Xero's Approach to Removing Deleted Purchase Orders

When a purchase order is deleted in Xero, it is not completely erased from the system. Rather, Xero marks it as "deleted" for record-keeping purposes. This allows you to:

• Maintain an audit trail showing all purchase orders created, even if later cancelled
• Retrieve deleted orders if needed for reporting or analysis
• Prevent manipulation of records that could enable fraud

While deleted orders remain in the database, they are excluded from general procurement reports to avoid inflating totals.

Regular Audits of Purchase Order Records

As vendors fulfil open purchase orders and new orders are created, stale entries can accumulate over time. It is good practice to periodically:

• Review all open purchase orders and close those from prior periods that are no longer expected to be fulfilled
• Filter for deleted purchase orders and determine whether any should be permanently archived based on accounting policies
• Spot check for anomalies that could indicate issues with procurement processes or data entry

Conducting regular small audits prevents purchase order records from becoming unwieldy.

Archiving and Retrieving Purchase Orders

Xero allows both open and deleted purchase orders to be archived based on user-defined criteria:

• Archive by age to automatically archive all entries older than a set time period
• Archive by vendor to clear out all orders associated with inactive supplier accounts
• Custom archive orders manually on a case-by-case basis

Archived purchase orders can still be accessed in the Archived tab for reporting purposes, but are excluded from operational procurement views. If needed later, archived orders can also be restored to active status.

Establishing archiving routines for both open and deleted purchase orders ensures efficient data management without loss of valuable information.

Advanced Purchase Order Features in Xero

Xero offers several advanced features for businesses that want to optimize their purchase order workflows and procurement processes. These features allow for greater control, efficiency, and analysis around spending.

Utilizing Approval Workflows for Purchase Order Control

• Set up multi-user approval chains to govern purchase orders before they are issued to suppliers
• Configure approval rules based on purchase order amount, supplier, account codes, etc.
• Ensure compliance and reduce unauthorized spending through defined review processes

Approval workflows enable oversight for better spend control while still allowing procurement teams flexibility.

Integrating Purchase Orders with Xero Inventory Management

• Connect purchase orders to inventory items for automated order creation
• Automatically update stock levels upon purchase order receipt
• Gain visibility into procurement impacts on inventory planning

Tight integration between purchase orders and inventory management provides end-to-end visibility and coordination.

Analyzing Purchase Order Data for Strategic Insights

• Review high-level procurement analytics natively in Xero
• Identify spending patterns, preferred suppliers, product demand signals, and more
• Informed data to optimize supplier relationships and purchasing strategies over time

Robust reporting and analytics transforms purchase order data into actionable business intelligence for competitive advantage.

Xero's purchase orders become even more powerful when layered with advanced features like approvals, inventory integration, and data insights. Businesses can tailor purchasing workflows to their needs while exerting greater control over spending.

Conclusion: Maximizing Efficiency with Xero Purchase Orders

Recap of the Xero Purchase Order Approval and Management Process

Xero provides a streamlined system to create, approve, and manage purchase orders electronically. Key benefits include:

• Automated PO number generation for easy tracking
• User role-based access control for approvals
• Templates to enable quick order creation
• Integration with inventory and bill payment
• Storage as searchable digital records

By leveraging Xero's purchase order features, procurement processes can be simplified and accelerated.

The Impact of Electronic Purchase Orders on Business Operations

Processing purchase orders digitally in Xero reduces manual paperwork and eliminates filing cabinets of records. This has multiple advantages:

• Orders can be accessed instantly from anywhere
• Approval workflows are expedited
• Errors are reduced by eliminating re-keying data
• Reporting and analysis is improved with digital records
• Overall efficiency is increased

Switching from paper to electronic purchase order management through Xero streamlines procurement and enhances visibility. This allows businesses to scale operations more easily and focus resources on core functions.

Related posts

• How to Create Purchase Orders in Xero: Ordering Made Easy
• How to Create Invoices in Xero Easily
• How to Manage Bills in Xero: Streamlining Accounts Payable
• Organizing Projects in Xero for Better Management