If your company relies on vendors, an efficient purchase order (PO) system is essential for keeping cash flow predictable and preventing budget surprises. Fortunately, QuickBooks Online gives you a simple way to manage purchase orders, streamline approvals, and keep vendor relationships smooth.
Yet many businesses either don’t use POs at all or rely on a messy, inconsistent process. That leads to duplicate orders, missed payments, and an accounting headache.
The good news? Setting up purchase orders in QuickBooks takes minutes, and once you do, you’ll have better visibility into spending, more control over your budget, and fewer last-minute payment fires to put out.
Here’s how to get started.
- What is a purchase order?
- How to create a purchase order
- Best practices for using purchase orders in QuickBooks
- Common mistakes to avoid
- Why ProcurementExpress.com solves these manual purchase order approval system challenges
What is a purchase order?
A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating the types, quantities, and agreed prices for products or services. It serves as a legally binding contract between your business and your vendors. This protects both parties by clearly documenting the transaction terms before any money changes hands.
In addition, purchase orders offer several key benefits:
- Better budget control by tracking committed expenses before they hit your books
- Improved inventory management through detailed order tracking
- Enhanced vendor relationships with clear communication and documentation
- Stronger audit trails for financial compliance
- Simplified reconciliation of received goods against orders
How to create a purchase order
Creating a purchase order in QuickBooks Online is simple, but you’ll need QuickBooks Online Plus or Advanced, as the feature isn’t available in lower-tier plans.
Here’s how to do it.
Step 1: Navigate to the purchase order section
- From your QuickBooks dashboard, click “+ New.”
- Under the Vendors column, select “Purchase Order.”
Step 2: Fill in the purchase order details
- Choose a vendor from the dropdown list (or add a new vendor if needed).
- QuickBooks will auto-fill vendor details (like address and terms) if they’re saved.
- Enter the purchase order date and shipping details.
- Select items from your inventory list or add new items manually.
- Confirm quantities and pricing (QuickBooks pulls default prices but allows adjustments).
- Add any special instructions or vendor notes if needed.
Step 3: Send and track the purchase order
- Click “Save and Send” to email the PO directly to your vendor.
- QuickBooks will automatically add the PO to your open purchase orders list.
- Track purchase orders in “Expenses” → “Purchase Orders” or run a “Purchase Orders” report.
Step 4 (Optional): Convert the PO into a Bill
- Once you receive the goods or services, convert the PO into a bill in QuickBooks:
- Go to “Expenses” or “Vendors” → Locate the PO → Click “Convert to Bill.”
- Review details and save. The bill will now be reflected in your financials.
Best practices for using purchase orders in QuickBooks
Want to keep your purchasing process smooth and avoid headaches down the line? Follow these best practices to make sure your QuickBooks purchase orders stay organized, efficient, and actually useful.
Keep vendor records clean and up to date
Nothing slows down purchasing like outdated vendor info. Keep contact details, payment terms, and order history organized in QuickBooks so you’re not scrambling for details when it’s time to place an order. Tracking vendor performance and pricing over time also gives you leverage for negotiating better terms.
Set up an approval process that actually works
A good approval system stops unauthorized spending without turning every purchase into a bureaucratic nightmare. Define clear spending limits and who needs to sign off on what. Keep it simple. Too much red tape slows everyone down. And whatever process you put in place, document it somewhere easy to find so no one’s left guessing.
Make sure your inventory and POs talk to each other
Your purchase order system should work with your inventory management processes, not against it. Track stock levels, set reorder points, and make sure QuickBooks reflects what’s actually in your warehouse (not just what you think is there). Regular inventory checks will save you from unnecessary purchases or stockouts.
Review your purchasing data before problems pile up
Don’t wait until cash flow is a mess to check your numbers. Set a recurring time—weekly or monthly—to review open POs, vendor performance, and spending patterns. Spot trends, negotiate better deals, and refine your purchasing strategy before things go off the rails.
Common mistakes to avoid
Even with a solid system, these common mistakes can throw a wrench in your purchasing process. Here’s what to watch out for:
Sloppy or incomplete data entry
A missing decimal or wrong quantity can create a mess of payment issues, inventory discrepancies, and vendor disputes. Before sending a PO, double-check that vendor details, pricing, tax rates, and shipping costs are accurate. A few extra seconds now can save hours of headaches later.
Relying too much on QuickBooks for purchase orders
QuickBooks’ PO system is fine until it isn’t. If you’re managing a handful of orders, it works. But at scale, approvals can become a bottleneck and tracking gets clunky. If you’re dealing with multiple approvers or high-volume purchasing, you may need additional tools or integrations to streamline workflows and prevent unnecessary delays.
Poor document management
A PO without linked invoices, receipts, or approval records is just a random number in QuickBooks. Keep a clean audit trail by attaching bills, receipts, and any special terms directly to POs. If a vendor dispute comes up, having everything organized will make it easier to track what happened and when.
Why ProcurementExpress.com solves these manual purchase order approval system challenges
Setting up purchase orders in QuickBooks is a step in the right direction, but it’s not a complete solution, especially as your business grows.
Without built-in PO approval workflows, QuickBooks can quickly become a bottleneck. Approvals get stuck in inboxes, budgets aren’t enforced before spending happens, and tracking purchases across departments turns into a time-consuming mess.
That’s where ProcurementExpress.com comes in. It picks up where QuickBooks leaves off, giving you automated approvals, real-time budget visibility, and better control over company spending before the money is spent. If QuickBooks’ PO system is slowing you down, it may be time to level up. Start your free trial of ProcurementExpress today.
