QuickBooks Purchase Order: How to Create One and 9 Best Practices
A QuickBooks purchase order is a document you create in QuickBooks to tell a vendor exactly what you want to buy, how many units, and at what price. It records your intent to purchase before any money changes hands. Later, when the vendor delivers and bills you, you link the purchase order to a bill or expense so your records stay accurate and complete.
Purchase orders matter because they add control to spending. They help you avoid duplicate orders, compare what you ordered with what arrived, and see committed costs before they hit your books. For growing businesses, that visibility prevents cash surprises.
In this guide, we’ll explain how QuickBooks Online purchase orders work, which plans include them, how to create one step by step, 9 best practices for managing them, common mistakes, and when you might need a more advanced purchasing system.
What Is a Purchase Order in QuickBooks?
In QuickBooks, a purchase order (PO) is a non-posting transaction. In simple terms, it does not affect your profit and loss or balance sheet when you create it. Instead, it acts as a record of a commitment. The financial impact happens when you convert the PO into a bill, check, or expense.
For example, a retailer orders 200 units of a product from a supplier. The owner creates a PO in QuickBooks and emails it to the supplier. When the goods and invoice arrive, the bookkeeper adds the PO to a bill. QuickBooks then records the cost and, if inventory tracking is on, updates stock quantities.
A QuickBooks purchase order records what you plan to buy. It only affects your books once you link it to a bill or expense.
Which QuickBooks Online Plans Include Purchase Orders?
Not every plan offers this feature. According to Intuit’s help article on creating and sending purchase orders, purchase orders are only available in QuickBooks Online Plus and QuickBooks Online Advanced. If you use a lower tier, you will need to upgrade or manage POs outside QuickBooks.
Plan features and menu labels can change over time and may differ by country. Always confirm current details in your own QuickBooks account or on Intuit’s support site before making plan decisions.
How to Create a QuickBooks Online Purchase Order
The process takes only a few minutes once the feature is turned on. Here are the general steps based on Intuit’s guidance.
Step 1: Turn on purchase orders
Open your account settings and go to the expenses section. Then find the purchase orders area, select edit, and switch on the option to use purchase orders. Save your changes.
Step 2: Create the purchase order
Select the option to create a new transaction and choose purchase order. Next, pick the vendor, enter the PO date, and confirm the shipping address.
Step 3: Add products or services
Enter each item, quantity, and rate. If you track inventory, choose the inventory items so stock updates correctly later.
Step 4: Send it to the vendor
Save and send the PO by email directly from QuickBooks, or print it. When you create a purchase order, its status is open.
Step 5: Link the PO to a bill or expense
When the vendor bills you, create the bill and add the open purchase order from the side panel. QuickBooks then closes the PO automatically, or keeps it open for remaining items if the delivery was partial.
Customize your purchase order template with your logo, terms, and a clear PO number field. Ask vendors to reference that number on every invoice so matching becomes quick.
QuickBooks Purchase Order Workflow at a Glance
| Stage | What Happens | Effect on Books |
|---|---|---|
| PO created | Order details recorded and sent to vendor | No financial impact |
| Goods received | Team checks quantities against the PO | No impact until billed |
| Bill entered | PO linked to the vendor bill | Expense or inventory and payable recorded |
| Bill paid | Payment recorded against the bill | Payable cleared, cash reduced |
9 Best Practices for Managing QuickBooks Purchase Orders
Sequential numbers make it easy to find orders and match invoices.
Accurate vendor records and item lists reduce errors on every PO.
An open purchase order report shows what you still expect to receive. As a result, you can chase late deliveries early.
Compare the PO, the delivery, and the invoice before paying. This simple check catches overbilling.
Bill only for what arrived and leave the remaining quantity open.
Manually close POs that vendors will never fill, so reports stay accurate.
Tagging POs by department or location improves spending reports.
Restrict user permissions so only authorized staff commit company funds.
Attach quotes, delivery slips, and invoices to the transaction for easy audits.
Good documentation also supports tax compliance. The IRS notes in its recordkeeping guidance for small businesses that purchases and other transactions generate supporting documents you need to record in your books. Linking POs, receipts, and bills in QuickBooks keeps that trail organized.
Purchase Orders and Inventory Tracking
If you sell physical products, POs work best alongside inventory tracking. When you add a PO with inventory items to a bill, QuickBooks increases quantity on hand. Consequently, your stock reports reflect purchases without extra entries. Our guide to QuickBooks inventory tracking setup explains how to configure items correctly.
Common Mistakes to Avoid
- Creating bills without linking POs: This leaves POs open and can double count expected costs.
- Using non-inventory items for stock: Quantities will not update, which breaks inventory reports.
- Ignoring price differences: Update the bill to the actual invoice price and investigate changes.
- Skipping approvals: QuickBooks Online offers limited built-in approval controls, so define an approval policy for large orders.
Limitations of QuickBooks Purchase Orders
QuickBooks handles basic purchasing well. However, growing businesses often hit limits. For instance, multi-level approval chains, supplier portals, three-way matching at scale, and complex receiving workflows usually require extra tools.
If you are reaching those limits, our overview of purchase order programs compares features found in dedicated purchasing systems. Some businesses also connect QuickBooks to a custom purchasing or CRM tool. In those cases, custom crm development can create approval flows and vendor workflows that sync cleanly with QuickBooks.
Frequently Asked Questions
Can I create purchase orders in QuickBooks Online Simple Start or Essentials?
According to Intuit, purchase orders are available in QuickBooks Online Plus and Advanced. Lower plans do not include the feature, so you would need to upgrade.
Does a purchase order affect my financial statements?
No. A purchase order is a non-posting transaction. It affects your books only when you convert it to a bill, check, or expense.
How do I close a purchase order in QuickBooks?
QuickBooks closes a PO automatically when you fully add it to a bill or expense. You can also open the PO and mark it or individual lines as closed manually.
Can I receive part of a purchase order?
Yes. When creating the bill, enter only the quantities received. The remaining quantities stay open on the purchase order.
Conclusion
A QuickBooks purchase order gives you a clear record of what you have committed to buy before costs reach your books. In QuickBooks Online Plus and Advanced, you can turn on the feature, create and email POs, and link them to bills to keep inventory and payables accurate. Follow consistent numbering, review open orders, and match deliveries to invoices. When your purchasing needs outgrow QuickBooks, consider dedicated tools or custom integrations that keep your accounting system at the center.
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