Purchase orders - what they are and how to use them

• Cash flow challenge: Sometimes I receive goods or services without a clear agreement in writing, which makes it hard to match invoices and avoid disputes. I want a simple way to keep my purchasing organised and my cash flow predictable.

• Perfect for: SMEs, finance teams, and anyone managing supplier relationships who wants more control and clarity over spending.

Novuna helps businesses put the right systems in place to manage purchases smoothly, from raising purchase orders to paying invoices on time. And if cash flow is ever stretched, we can connect you with flexible funding to bridge the gap.

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What is a purchase order?

A purchase order (PO) is a document sent by a buyer to a supplier to confirm an order before goods or services are delivered. It outlines what is being purchased, in what quantity, at what price, and under what terms. Once accepted by the supplier, it becomes a legally binding agreement.

Why use purchase orders?

• Clarity: Both buyer and supplier know exactly what has been agreed.

• Control: Helps businesses track spending and stay within budget.

• Proof: Acts as evidence in case of disputes or errors.

• Cash flow planning: Links expected purchases with invoice schedules to avoid surprises.

Key information included in a purchase order

• PO number (unique reference for tracking)

• Date of order

• Buyer and supplier details

• Description of goods or services

• Quantities and agreed prices

• Delivery date and location

• Payment terms

How purchase orders link to invoices

When goods or services are delivered, the supplier sends an invoice that should match the details on the purchase order. This makes reconciliation easier for finance teams and avoids delays in approving payments.

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Tips for using purchase orders effectively

• Always assign unique PO numbers for easy tracking.

• Use software to automate PO creation and approval.

• Match every invoice against its PO to avoid duplicate or incorrect payments.

• Share PO details with relevant teams so they can manage stock, budgets, and timelines.

How Novuna Business Cash Flow can help

Purchase orders bring control and structure to your business finances, but even with a clear process in place, late payments can disrupt cash flow. Novuna helps businesses secure funding against invoices, ensuring supplier commitments are met while waiting for customer payments.