A Purchase Order (PO) number is a code used by businesses to track purchases, and some companies provide PO numbers to customers to track orders. The format varies, but it often includes alphanumeric characters indicating information about the order. PO numbers are used to verify orders, apply costs to budgets, and make payments to sellers.
A Purchase Order (PO) number is an alphanumeric code assigned to a particular request to purchase something. Most often, PO numbers are used internally by businesses to track their purchases. Some companies, however, will assign codes to all of their sales and provide PO numbers to their customers so that customers can track their orders. These codes can be in any alphanumeric format, and many businesses will use specific letters or numbers to indicate certain things about the order, such as what is being sold, the location, the buyer, and the date.
Use within companies
In many companies, a purchase order number is assigned after an employee or department submits a request to order certain goods or services. The request is typically sent formally to a purchasing agent using what is known as a request form. If the request is approved, a purchase order is created and assigned a purchase order number. At that point, the order is placed with another company, which often records the buyer’s PO number for inclusion in the order details.
While the supplier prepares a shipping or packing list to accompany the customer’s order, the purchase order number is usually included in the details. This allows the buyer’s receiving agent to verify the quantity and type of goods delivered and to confirm that the shipment is associated with a duly authorized order. The PO number also appears on the invoice and any other documentation provided by the seller to the customer. From this point of view, the PO number speeds up the planning of payment to the seller and allows the goods to be routed to the appropriate department.
The PO number also allows the company to apply costs to the budget of the department that placed the order. It also provides the accounts payable department with verification that the spend is legitimate. Payment can then be made to the seller.
Format
The exact construction and length of a PO number will vary from company to company. Many businesses that operate multiple sites will use the first few characters of the code to identify the ordering location, such as “WHO” to represent a facility in Chicago. The next characters might identify the specific department that placed the order, such as “RD” to represent the R&D department. Thus, the PO number for an order placed by the research and development department of a company in Chicago might begin with “CHIRD,” followed by other alphanumeric characters that provide additional information about the order.
Businesses typically structure their PO numbers in whatever way works best with their internal location systems. Some also make use of dashes or spaces, which can help when only certain characters within a PO number need to be read for a specific purpose. In response to the wide variety of lengths and formats that can be used, many vendors configure fields in their order tracking databases to allow any number of characters, even 30 or more, to be used in an order number of purchase.
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