Below are two free purchase order templates and the seven steps that take an order from “we need malt” to “invoice paid and closed”. The Word file is a clean PO form to send to suppliers. The Excel file is a PO log that tracks every order through those seven steps and flags anything late, mismatched or missing an invoice. It also has a calculator tab that builds the PO totals for you.

The examples come from Tidewater Brewing Co., a small craft brewery ordering grain, hops, cans and labels every week.

The PO form (Word)

One page, ready to save as a PDF and email. It includes your company block, PO number, date and delivery deadline. Below that are vendor, ship-to and bill-to boxes, a line-item table, then subtotal, tax, shipping and total. Terms and instructions go at the bottom with three signature lines. The sample is PO-0418 for $3,223.70 of malt and hops.

The PO log and calculator (Excel)

The PO Log tab has one row per order. Type in the basics and the sheet calculates the variance between the PO and the invoice, how many days each order has been open, and a flag for anything needing attention. The tiles across the top give you the month at a glance: what’s committed but not yet invoiced, how many deliveries are overdue, how many invoices don’t match, and what’s waiting for approval. The PO Calculator tab works out the line totals, an optional discount, sales tax, shipping and the PO total. Copy those figures into the Word form, or print the tab as it is.

Seven steps from request to closed PO

1. Someone asks for something

Every PO starts as a request. The brewer needs 40 bags of pale malt for next week’s brew schedule, so Mateo puts it in writing: what, how many, by when, and roughly what it’ll cost. This can be an email or a line on a shared list. It doesn’t need to be a formal requisition form unless you’re bigger than a dozen people. What matters is that the person ordering isn’t the person approving.

2. Get a price before you commit

For repeat items from regular suppliers, last month’s price is usually fine. For anything new or large, get a written quote, and two or three quotes if you can. The quote reference goes on the PO (GLM-Q-8812 in the sample). If the invoice later comes in at a different price, you’ll have something to point to.

3. Approve it

Set a threshold and stick to it. At Tidewater, the head brewer approves ingredient orders up to $5,000 and the owner signs anything above that or anything outside the normal categories. PO-0417, a $2,365 order of taproom furniture, is sitting at Pending approval for exactly that reason: it isn’t a brewing expense. The log counts pending approvals in a tile so they don’t get forgotten.

4. Issue the PO

Give it a unique number, fill in the Word form, save it as a PDF, and send it. Then add it to the log with the status Sent. Three details on the form save headaches later:

• “Quote the PO number on every invoice.” Without it, matching invoices becomes guesswork.
• A delivery date and receiving hours. A pallet of grain arriving at 5pm on a Friday when nobody’s there to sign is a problem you’ve caused yourself.
• What happens with partial shipments. Either they’re OK or they’re not. Say which.

5. Receive the goods and check them

When the delivery arrives, someone counts it against the PO, not against the packing slip. They note any shortages or damage, and the received date goes in the log. If only part of the order arrives, mark it Partly received. Pacific Label’s PO-0413 is in that state. It was expected on October 6, so the log has flagged it LATE.

Brewers Hardware’s PO-0415 is also LATE: sent on October 1, due October 8, and nothing yet. That’s a quick phone call, and the log is what tells you it’s needed.

6. Match the invoice: the three-way match

This is the step that pays for the whole system. Before an invoice is paid, three documents have to agree:

If all three agree, pay it. If they don’t, find out why before paying. In the sample, KegLink’s invoice for PO-0411 came in at $1,210.00 against a PO of $1,150.00. The log shows a +$60.00 variance and a CHECK flag. It might be a legitimate delivery charge that was missed off the PO. It might be a pricing error. Either way, someone should ask before the money goes out.

The opposite case is flagged too. Chemstar delivered PO-0412 on September 22, but no invoice has arrived. The log marks it NO INV, because an unbilled delivery is still a liability you’ll need to cover.

7. Close it

Once the invoice is matched and paid, set the status to Closed. The row greys out, drops out of open commitments, and stops counting days open. Closing POs properly is what keeps the “open commitments” tile honest. That’s $15,560 in the sample: money you’ve promised to spend but haven’t been billed for yet. It’s one of the most useful numbers for cash planning, and most small businesses have no idea what theirs is.

Getting more out of the log

• Watch spend by category. Filter the Category column to see what’s going on packaging versus ingredients versus repairs. If spending keeps creeping past plan, our budget report template is the next step.
• Tie POs to stock. For businesses that hold inventory, received POs are what drive stock levels up. The inventory report template tracks the other side.
• Review LATE flags weekly. One late supplier is an annoyance. The same supplier late four orders running is a sourcing decision.
• Keep numbering simple. PO-0001 onward works fine. If you want the year in it, use PO-2026-0418. Just never reuse a number.

FAQ

Is a purchase order legally binding?

Once the vendor accepts it, by acknowledging it, shipping the goods or starting work, it generally forms a contract on the terms written on it. That’s why price, quantity, delivery and terms belong on the PO itself rather than in a phone call. For anything large or unusual, have your own terms reviewed.

What’s the difference between a purchase order and an invoice?

The buyer issues the PO before the purchase, to say what they want. The seller issues the invoice after delivery, to ask for payment. Matching one against the other is the whole point. The invoice should never say anything the PO didn’t.

Does a small business really need purchase orders?

Not for every coffee filter. But once more than one person can order things, or you’re spending a few thousand dollars a month with suppliers, POs stop being paperwork. They become the simplest way to know what’s been promised, what’s arrived, and what you actually owe. Many businesses set a floor, such as POs for anything over $250, and use expense reports or a company card for everything smaller.