What a Local Purchase Order is, and when to use it ?

A Purchase Order or Local Purchase Order LPO is a commercial document issued by a customer or buyer to a vendor or seller for the purchase of goods. Often the vendor would have first issued a “quotation” or “tender” to the customer for the supply of these goods. The customer upon acceptance of the quotation would then issue an LPO based on this quotation. The purchase order is a legal offer to purchase. When accepted by the vendor, it is binding.Note that while a document for the purchase of goods is called a Purchase Order, a similar document issued by a customer to a vendor requesting works done is normally called a “Work Order”.

How To Write an Local Purchase Order

Just like a sales invoice or price quotation, the purchase order can be divided into 3 main parts, the header, body & footer. These parts can typically contain the following elements :

LPO Header

Your Company letter head : Comprises your business name, logo, address, telephone & email and web address if available. In some countries, you must also include your business registration number and tax registration number.

The words “Local Purchase Order” clearly written towards the top of the page.

A Purchase Order number. This is a running serial number that you maintain. Each LPO issued should have a unique PO number hence, no two LPO’s should have the same number.

A Purchase Order Date : The date when the LPO was issued

Vendor Ref No. : Vendor Reference which can be a quotation number if this Local Purchase Order was raised in acceptance of the quotation or tender given by a Vendor.

Your terms of payment or how soon you expect to pay your vendor E.g. “Cheque on delivery”, “Cash”, ”30 days after delivery” etc.

Your customer or client name and postal or physical address.

LPO Body

A description of the goods you are purchasing, quantity, unit of measure, price per unit and total amount for individual items. In the case of “Work Order”, your scope of work and amount for individual items.

LPO Footer

Total Amount of all individual items.

If applicable, a tax amount and total after tax.

Delivery Date : Specify the number of days or a due date by when you expect goods to be delivered.

Other comments you may have like delivery instructions etc.

Any other terms and conditions. If unsure, seek professional advise from a solicitor to draft your terms and conditions. You may place this in the footer or the reverse side of the PO.

You can use any word processor or spreadsheet software program to create a Local Purchase Order.

Return from Local Purchase Order to Procurement strategy.

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