The Ultimate Guide to Purchase Orders for Consumer Brands
Master purchase orders efficiently with our complete guide. What they are, how they work, and why automating them can save you hours every week.
If you're working in a CPG brand, especially in operations, finance or sales, you’ve probably come across a purchase order. Maybe it came in as a PDF attached to an email. Maybe you were required to use an EDI software. Or maybe it was handwritten on a piece of paper and slid across a trade show booth table. No matter how it arrives, the purchase order (PO) is a vital part of the wholesale fulfillment or purchasing process.
In this post, we’ll break down exactly what a purchase order is, how to create a purchase order and how automating the PO process to reduce manual tasks and increase overall efficiency.
Purpose of a Purchase Order
The main purpose of a purchase order is clarity. It serves as a legal document to set expectations upfront and ensures both sides are aligned. For buyers, it acts as a control mechanism to avoid surprise spending. For suppliers, it’s a commitment that goods or services will be paid for once delivered.
Here are a few specific benefits of purchase orders:
Budget control: POs are often required for internal approval and can be tied to department budgets.
Legal protection: Once accepted, the PO becomes a legally binding contract.
Inventory planning: POs help suppliers plan production and manage stock.
Order tracking: POs give operation teams and account managers a single reference number to track incoming orders across digital systems.
In B2B wholesale, purchase orders are especially important when working with large retailers who typically have strict guidelines for delivery dates and packaging. Miss a ship window and you will be hit with a fine, risk damaging relationships or even get discontinued from the shelf.
If you're managing wholesale orders manually, grab our free operations template to keep things organized and clear.
Types of Purchase Orders for Procurement
Depending on your relationship with the supplier, the timeline and the specificity of the order, there are four common types of purchase orders:
Standard Purchase Orders: This is the most common type. It includes all the key order details like item descriptions, quantities, agreed upon prices and delivery dates. These are often used for one-time purchases or smaller vendors.
Planned Purchase Orders: The buyer knows what they need and how much, but delivery schedules are flexible. This might happen if you’re planning a large seasonal order but don’t have exact ship dates yet.
Blanket Purchase Orders: This is an agreement to buy a certain amount of goods or services over time, often at a fixed price. Deliveries happen as needed. These are common when working with contract manufacturers (co-packers) or recurring purchases.
Understanding these purchase order types is key for procurement departments managing raw material and manufacturing across different vendors.
How Wholesale Purchase Orders Are Received
Purchase orders can come in through a variety of channels, especially in wholesale order fulfillment.
Common methods include:
Email Attachments: Often as PDFs from retail buyers or procurement departments.
EDI (Electronic Data Interchange): Used by large retailers for automated order transmission.
Slack or Messaging Apps: Some POs come in informally through internal communication channels.
Procurement Portals: Companies may issue POs through procurement systems or vendor platforms.
Paper Documents: Still surprisingly common at trade shows or for smaller buyers.
Because of this variety, managing purchase orders manually can get messy fast. Our automation tool helps you manage incoming orders, extracting the right data no matter where the PO originated.
Common Purchase Order Terms
Here’s a quick cheat sheet:
Purchase Requisition: An internal formal request to create a PO, mostly used in e procurement systems.
PO number: A unique ID to track the order. Crucial for matching invoices and managing purchase orders.
Open Purchase Order: A PO that’s been issued but not fully received or paid.
PO Work Order: A PO tied to a specific production or service task.
PO Payment Order: A system used to process payments via POs.
An open PO can be helpful if you’re receiving partial shipments. But open POs come with risk. If you forget to close them or reconcile partial deliveries, you could lose track of what’s been fulfilled and what’s still owed.
The Order-to-Cash (O2C) Process
The order-to-cash process encompasses all steps from when a customer places an order to when the business receives payment. This includes order management, fulfillment, invoicing and payment collection, typically handled across operations, supply chain and finance.
In theory, it’s a clean process:
A supplier receives a purchase order from the buyer, triggering order fulfillment, shipping and inventory management updates.
Once the goods are delivered, the supplier sends an invoice to the buyer that matches (or references) the original purchase order.
The buyer's finance team will match invoice to purchase order as a part of the accounts payable process to prevent duplicate orders, overpayments and fraud.
In reality, emails get buried, spreadsheets break and POs vanish into the void. That’s why many procurement teams end up spending hours each week chasing down missing info and manually updating trackers.
In some cases, buyers pay by PO number. This means the invoice must match the purchase order exactly and reference its number. If something’s off, like wrong pricing, mismatched quantities or wrong payment terms, payment can be delayed for weeks.
That's why a clear standard operating procedure (SOP) is critical. Optimizing your O2C process can lead to improved cash flow, customer satisfaction and operational efficiency.
Difference between Purchase Order and Invoice
A purchase order is issued by the buyer. It’s a formal request to purchase goods or services - “Here’s what I want and here’s what I’ll pay.”
An invoice is issued by the supplier. It’s a request for payment - “Here’s what I delivered, please pay me.”
Automating the Purchase Order Process
There are a couple ways you can automate your order-to-cash process:
PDF PO Extraction: Pull purchase order data straight from email attachments and auto-extract key fields like SKUs, quantities, delivery dates, payment terms and PO numbers.
Smart Invoicing: Generate invoices that match the purchase order to reduce back-and-forth with accounts payable teams.
Live Trackers: Sync data and implement dynamic trackers so your team can track order status, fulfillment, invoicing and payment in real time.
Communication: Send automated updates to Slack channels so operations, supply chain and finance stay in sync.
PO Matching & Archiving: We store and match every purchase order, invoice and logistic document so nothing slips through the cracks.
Here are the benefits:
No more digging through inboxes
No more manual tasks.
Clean handoffs between teams and faster cash collection
Save time and reducing labor costs
Improving cross-functional visibility
We can help CPG brands do exactly that. Reach out if you'd like to learn more!
Final Thoughts
Purchase orders are the backbone of the wholesale order and procurement process. Whether you're ordering packaging or selling your latest product line into Whole Foods, getting your PO process dialed in saves time, reduces mistakes and speeds up cash flow.
Want to see it in action? Let’s set up a quick demo. And if you want a head start, download our free Google Sheet template to get your operations off the ground.
FAQ
1. What is a purchase order and why is it important for consumer brands?
A purchase order (PO) is a formal agreement to buy goods or services. It’s essential for consumer brands to manage both procurement of raw materials and wholesale orders efficiently, reduce errors and maintain legal and financial control.
2. How do CPG teams typically receive purchase orders?
Purchase orders are received via email, EDI systems, messaging apps like Slack, procurement portals or even physical paperwork at trade shows.
3. What’s the difference between a purchase order and an invoice?
A purchase order is sent by the buyer to initiate a purchase; an invoice is sent by the supplier to request payment after the goods have been delivered on agreed upon terms.
4. What is the order-to-cash (O2C) process in wholesale operations?
The O2C process covers everything from receiving a PO to getting paid. It includes order confirmation, fulfillment, invoicing and payment. Automating this process improves cash flow and reduces manual errors.
5. Can purchase orders be automated for CPG brands?
Yes, tools now exist to automate PDF extraction, invoice generation, order tracking, Slack alerts and PO matching. You can read this article to learn more.
