What is a purchase order?
Are you planning to start a business in the commercial sector and wondering about the usefulness of creating purchase orders? While a purchase order is not mandatory, it is strongly recommended to draft one for each order, to protect your company as well as your customers in case of disputes. Discover the function of a purchase order, its usefulness in your commercial exchanges, and the essential rules for drafting a legally valid purchase order.
Definition of a purchase order
It is a document established in a commercial context that validates the contractual clauses of a quote and also serves as a solid contract between the client and your company. The purchase order, preferably preceded by a quote, therefore justifies the existence of an order, thus protecting both parties.
Its utility
Creating a purchase order allows the validation of a sales promise, provided that it is signed by both the company and the client. The client thus commits to paying what they owe, while the company commits not to modify the order by adding a product or sending a different product, for example. Finally, the purchase order can also serve to inform and obtain acceptance of the company's general terms and conditions of sale (GTC) by the client.
Why issue a purchase order to your clients?
Validate a sales promise
To validate this commercial exchange, the client and the company must sign the purchase order, manually or with an official stamp. These signatures commit the company to provide the order placed and the client to pay for the ordered supply within the agreed timeframe. No modification to the delivered goods can be made following this contractual agreement.
Protect yourself with GTC
To perfect this sales promise, it is advisable to integrate the company's general terms and conditions of sale into the purchase order, to have them validated by the client. To ensure proper acknowledgment of the GTC by the client, you can integrate them on the back of the paper purchase order or within the same PDF for an online purchase order. Finally, add a checkbox at the signature level indicating that the client declares having read and accepted the attached general terms and conditions of sale.
Are purchase orders mandatory?
It is not legally mandatory to create a purchase order for each order placed by a client. A simple agreement between both parties on the order and price is sufficient to validate a commercial exchange. However, to secure and validate this agreement, the purchase order is highly recommended, especially in case of disputes, such as non-payment or a product not meeting the client's expectations. For service provision, legal protection will rather come through the contractual clauses of a quote.
How to create a proper purchase order?
Legal requirements for a purchase order
Have you searched for how to draft a purchase order in Excel or are you looking for templates for inspiration? The reality is more complicated, as a large number of legal requirements must appear on your purchase order, each of which may vary depending on your company's form or whether your client is an individual or a professional.
Accounting software
Furthermore, remember that a simple omission of a legal requirement can backfire on the company in case of disputes with the client. This is why it may be wise to draft these accounting documents using dedicated software that is efficient and complies with Belgian regulations.
Summary
To confirm your credibility as a company, you will need to follow these steps for a compliant purchase order:
- Properly fill out the purchase order with all mandatory legal requirements: research the obligations concerning your company's form thoroughly;
- Follow current legislation regarding the type of contractual clauses to insert, depending on whether your client is a consumer or another company;
- Integrate your company's general terms and conditions of sale into the purchase order, so that the consumer or professional can review them;
- Always sign the purchase order and have it signed by the client, to validate the sales promise securely (the terms and GTC being thus included in the contractual clauses of the purchase order);
- The invoice provided to the client must reference the purchase order number. Also note that each purchase order must follow unique and continuous numbering.
Key takeaways about purchase orders
Purchase orders require great precision in their drafting to protect both the client and the company in case of disputes. They form a solid contract between both parties, mutually committing them to respect the order. The security aspect for the company can be optimized by integrating GTC, as well as by using European-compliant management software for your quotes, invoices and purchase orders.
