There are 2 common reasons organizations might want to use purchase orders
- To obtain proper authorization for purchases and facilitate proper payment
- To control and track inventory in the organization’s accounting system
Purchase orders are an important tool that businesses should use to ensure spend stays within budget. Without purchase orders tracking expenses is more difficult, prone to errors and validating delivery reports becomes a nightmare.https://firstname.lastname@example.org/purchase-orders-what-they-are-why-use-them-and-what-to-do-with-them-new-data-7c1cf7ce3dce
If purchase orders intended to meet the authorization objective are processed “after-the-fact,” then the objective has not been met.
- First, there must be other authorization procedures in place in relation to the purchasing and cash disbursements function.
- Second, purchase orders should still be completed prior to making the actual purchase. When goods are physically received the items should be checked by the receiving department, then marked as received in your accounting system and matched with the invoice.
If purchase orders intended to meet the inventory control objective are processed “after-the-fact,” then the objective has not been met.
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