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Many large companies and government agencies, particularly those in the USA, use "purchase orders" as part of their ordering process. Purchase orders are legal documents, which are essentially a commitment to pay the vendor for the goods or services listed on the purchase order. When a purchase order is accepted, the vendor is agreeing to extend credit to the purchaser as per the terms listed on the purchase order. In the United States, almost all government agencies, school systems, and many large companies make purchases only by using purchase orders. If you wish to sell to these groups, you will need to be willing to accept their purchase orders.

Information Contained In A Purchase Order
A purchase order should contain both the vendor's information as well as the purchaser's information, including the address, phone and fax numbers, and other contact information. The purchase order should also contain payment terms, requested delivery dates, item identification, order quantities, price quote amounts, shipping terms, and total costs.

Payment Terms
When you accept a purchase order, there are typically payment terms included. The most common payment terms are 30, 60, or 90 days, but it can be virtually anything, so the terms sometimes need to be negotiated and agreed upon.

Location Problems
If you are in a different country from the purchasing company, managing purchase orders can sometimes be a problem. In such situations, you might consider working with your ecommerce service provider to accept purchase orders on your behalf.

Legalities
Laws are not global -- they are bound by the borders of countries. If you are located in one country and you accept a purchase order from another country, it can often be difficult to enforce legally. A third-party ecommerce company may be better suited to manage foreign purchase orders on your behalf.

A Number Is Not Enough
It is best to obtain a physical copy (by fax or postal mail) of the actual signed purchase order. Many companies may attempt to provide only a purchase order "number" which will not be significantly helpful if you have a collection problem or a dispute regarding the items ordered, quantity ordered, quoted price, etc.

There are a variety of reasons that companies use purchase orders as part of their purchasing process, but the bottom line is that you will be leaving business on the table for another company if you don't accept purchase orders from reputable companies.

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