Perfecting Construction Purchase Orders
What is a Purchase Order?
Purchase orders are requests to make a purchase from seller. Meaning, Purchase Orders are essentially contracts binding the buyer and the seller through the product being sold. A purchase order should include the key details of an order, including descriptions, quantities, discounts, and sell prices of the products being purchased. Ideally, they would also include payment terms and shipment dates. When a seller accepts a purchase order, a legally bound contract is formed between the two parties. It is important that the buyer makes specific details of the request very clear, and that the seller includes specific product information so there are no miscommunications or confusion.
What exactly should a construction purchase order include?
- Products being purchased
- Product descriptions
- Quantities of items being purchased
- Sell Price & Any Discounts
- Payment Terms
- Shipping Method & Dates
- Seller Information
- Buyer Information
- Any other business specific terms and conditions
Why are purchase orders important?
Purchase orders are necessary for contractors because they serve as concrete, legal expectations for the buyer and instructions for the seller. If a deal goes a rye, it is important to be able to easily find and identify the appropriate purchase order so that both parties can determine what exactly went wrong and whose is at fault.
The organization of purchase orders it particularly important for contractors in case a deal goes sideways, the documentation can provide the necessary documentation. Utilizing purchase orders should be adopted for all supplier and every purchase. This will ensure that you have accurate records.
Common construction purchase orders issues:
Often contractors have problems with storing their purchase orders. Many contractors today still use the old school paper methods or a standalone legacy system. Having siloed data is a consistent problem across firms in the construction and service industry. Since many contractors do not have a centralized database to store business information, documents, and communication between the various stakeholders, project management can be disjointed.
In addition to having disjointed data, paper methods take longer for data entry and leaves room for human error. After observing the complications of many subcontractors, DocuWrx realized that contractors and field service firms needed a better tool.
Why use the Kosmas Construction Software for Purchase Order Management?
Kosmas provides subcontractors with a better, more robust system for managing their purchasing process. The software allows buyers to create purchase orders and track material costs by labor activity. It also allows project managers to track the progress of the project in detail by instantly updating the system when products are delivered. With Kosmas in place, the elimination of paper documents decreases the need for manual labor in the office which in turn lowers chance of error, decreased labor costs, and increases overall efficiency.
Kosmas business software also allows a greater degree of collaboration between different project stakeholders. Implementing a central database allows various members of the team in the office and the field to share information with ease and in real time. With business software that includes purchase order management, office staff can complete purchase order tracking, receive approval faster, control access permissions, and access real-time payment status, eliminating confusion and allowing for greater efficiency in both the office and the field.
Purchase orders will continue to play an absolutely critical role in the procurement of construction products and services. They do this by holding buyers and sellers accountable for their initial agreement. Because of this, it is important that contractors know what a purchase order must include. Subcontractors should remember that their purchase orders should be clear, include all key information, and should be stored in an organized, easily accessible place. By following these few key points, you can boost both efficiency and profits of your business by creating better purchase orders which can be processed more quickly.