What Is Purchase Order Processing?

Most large companies and organizations use purchase order processing.

For large businesses or organizations, purchase order processing is a necessity for most purchasing and a must for all large orders. Purchase order processing steps vary, but most include getting estimates from vendors and final approval from a manager.

Estimate

Purchase order processing are the steps an employee or group, within a large business or organization, must do to purchase anything. Typically, the employee requesting an order gets an estimate from the vendor. He then includes that in the request form to the purchasing manager.

Receiving Bids

If the expense exceeds a certain amount, many organizations ask the requesting employee to get at least three estimates from different vendors. The manager of purchase orders can then review the estimates and decide which one to pursue.

Approval

Once the purchase order manager processes the purchase order, the employee can order the goods or services.

Accounts Receivable

The bill for the goods or services should go to accounts receivable with the purchase order. Accounts payable needs both to pay the bill.

References

• UPenn: Procure to Pay