Purchase Order Definition and Types in Precoro
Learn what a purchase order is and which types to use for your company's purchasing needs.
TABLE OF CONTENTS
What Is a Purchase Order?
A purchase order (PO) is an official document a business (buyer) sends to an external supplier (vendor) confirming the intent to purchase specific goods. It typically includes:
- Product descriptions
- Quantities and agreed prices
- Delivery schedules
- Payment terms
Once the supplier approves the PO, it becomes a legally binding contract, protecting both sides if either party doesn't meet their obligations.
For tips on managing purchase orders, please visit our blog post.
Purchase Order Types
Comparison Table
The table below helps you compare PO types and choose the one that best fits how you buy, invoice, and receive items or services.
| PO Types | Choose when | Key difference |
| Standard | You know the items or services you need, their quantities, and their prices. | Tracks items by quantity and price. |
| Blanket per Total | You agree on a total spending limit with a supplier, but you don’t know the exact items or purchases in advance. | Tracks the overall PO amount instead of pre-specified item lines. |
| Service | You buy services and need to track spend by amount rather than by item quantity. | Tracks service amounts and supports partial invoicing. |
Key Characteristics by Type
Standard PO
Standard POs in Precoro track purchases by quantity and price and can be created from scratch, an approved purchase requisition, or requests for proposals.
💡 Please note: Process PO faster and with less manual effort—upload a supplier document and let AI Document Scanning extract the details and match the supplier and items for you. It’s included in your package starting from the Automation plan.
When working with standard POs, you can:
- Create receipts to track delivered quantities.
- Create partial or full invoices against the PO.
- Use 2-way or 3-way matching.
- Track the purchase against a budget.
- Apply tolerance limits when matching the invoice with the PO.
Best for: office supplies, equipment, hardware, fixed-price services, and other purchases where the scope is known before ordering.
Blanket PO
When working with blanket POs, you can:
- Define the total amount available for the agreement. The actual items and costs are added later when creating invoices.
- Create multiple invoices against the same order until its total amount is used.
- Record budget consumption based on the invoices created against the PO.
Best for: ongoing supplier relationships, repeated purchases, recurring deliveries, and agreements where the exact purchase details become known over time.
Service PO
Service Orders are amount-based, which makes them a better fit for services where the exact usage or final cost may vary over time.
When working with service POs, you can:
- Create partial or full invoices against the SO.
- Define a service period.
- Use a budget breakdown to distribute costs across periods.
- Create receipts if service confirmation is required.
- Use 3-way matching when receipts are part of your process.
- Track the purchase against a budget.
Best for: consulting, maintenance, utilities, subscriptions, professional services, and other purchases where value matters more than quantity.
Recurring Order
Instead of creating each PO manually, you define the recurrence once, and Precoro generates future documents based on the original order.
When working with recurring POs, you can:
- Choose the needed Validity Period and Repeat frequency.
- Select Budgets for future recurring documents.
- Use the original PO as the template for each new document.
- Let each generated PO follow the Approval Workflow, or enable automatic approval for recurring documents. Learn how to configure it here.
Best for: subscriptions, recurring supplies, scheduled deliveries, regular service fees, and other predictable repeat purchases.
💡 Please note: Recurring order isn't a separate purchase order type. It is a scheduling option available for standard and service orders.