Xero
Accounting
Experts

JacRox are Xero Gold Partners

Experienced Chartered Accountants

Umar Memon

                                                                     

Creating and Managing Purchase Orders in Xero Accounting

A purchase order
Understand Purchase Orders in Xero

Introduction

Welcome to JacRox, a brand division of Jack Ross Chartered Accountants in Manchester. We are dedicated to offering expert Xero services to a wide variety of clients, from sole traders to large corporations. If you’re in need of state-of-the-art cloud accounting software, use the contact form on the right and one of our JacRox team will be in touch to discuss next steps.

As a business owner or accounting professional, understanding how to create and manage purchase orders is crucial for maintaining accurate financial records. Xero, a leading cloud accounting software, allows you to create and manage purchase orders. In this article, I will briefly explain purchase orders and their importance to accounting in general, how Xero can help you manage your finances, before outlining several step-by-step guides ensuring you know how to get the most out of Xero’ and its features.

Explanation of purchase orders and their importance in accounting

Purchase orders are official documents a buyer sends to a supplier, indicating the intent to purchase goods or services. They serve as a contract and provide details about the quantity, price, and delivery terms.

In accounting, purchase orders play a vital role in ensuring proper record-keeping and financial control. Here are a few reasons why purchase orders are important:

  1. Budget Planning: Purchase orders help businesses track their spending and budgeting. By having a clear record of planned purchases, businesses can allocate funds accurately and avoid overspending.
  2. Order Accuracy: Purchase orders require detailed information about the items being purchased. This ensures that the buyer receives the correct products, quantities, and agreed-upon terms from the supplier.
  3. Invoice Verification: Purchase orders act as a reference document when verifying supplier invoices. By comparing the invoice with the purchase order, businesses can ensure that they are only paying for items they have actually ordered and received.
  4. Inventory Management: Purchase orders assist in managing inventory levels effectively. By keeping track of orders and deliveries, businesses can avoid stockouts or overstocking, leading to improved efficiency and cost control.

Purchase orders are an essential component of the accounting process. They help maintain financial accuracy, facilitate effective budgeting, ensure order accuracy, aid in invoice verification, and assist with inventory management. By understanding and effectively managing purchase orders, businesses can streamline their accounting operations and maintain financial control.

Understanding Purchase Orders in Xero

Overview of How Purchase Orders Function in the Xero Accounting Software

In Xero accounting software, purchase orders are important tools that help streamline the purchasing process. They allow businesses to create and manage orders for goods or services prior to making a payment. Purchase orders help keep track of inventory levels, manage expenses, and ensure accurate financial reporting.

When creating a purchase order in Xero, you can specify the quantity, unit cost, and other relevant details for the ordered items or services. Once approved, the purchase order can be sent to the supplier. This helps establish a clear communication channel between your business and the supplier, ensuring that everyone is on the same page.

Xero also allows you to easily convert purchase orders into bills or invoices. This simplifies the process of recording the purchase and paying the supplier. By linking the purchase order to the resulting bill or invoice, you can maintain accurate records and easily track expenses.

Furthermore, Xero provides various features to manage and track purchase orders effectively. You can easily view the status of each purchase order, including whether it has been sent, received, or paid. Xero also enables you to create reports that provide insights into your purchasing history, helping you make informed decisions about your suppliers and expenses.

Understanding how purchase orders function in Xero can significantly improve your business’s purchasing process. It allows for better inventory management, expense tracking, and financial reporting, ultimately leading to more efficient operations.

Creating Purchase Orders in Xero

Step-by-step guide on how to create purchase orders in Xero

  1. Log in to your Xero account and navigate to the “Business” tab.
  2. Click on the “Purchases” option in the menu.
  3. Select “Purchase Orders” from the drop-down list.
  4. Click the “New” button to create a new purchase order.
  5. Fill in the necessary details, such as the supplier, delivery address, and items you want to order.
  6. Add additional information like quantity, price, and tax, if applicable.
  7. Save the purchase order once you have completed all the required fields.
  8. Review the purchase order to ensure accuracy and make any necessary edits.
  9. Once you are satisfied with the purchase order, you can send it to the supplier either by email or by printing it out.
  10. Xero allows you to track the status of your purchase orders, making it easier to manage and follow up on deliveries.

By using Xero’s purchase order functionality, you can streamline your ordering process, keep better track of your inventory, and ensure timely deliveries from your suppliers.

How to use purchase orders in Xero

The Jack Ross Team has been an absolute delight. Professional, nice and fast during the Audit procedure. Thank you Jack Ross Team.

Very good service from the Jack Ross Team. They gave us good advice and completed a very efficient audit. They have a friendly and competent team. I would surely recommend them.

Brilliant service from the Jack Ross team in setting up several companies in very quick time, along with providing associated accountancy advice. Can recommend wholeheartedly as a leading accountancy practice with a can-do attitude.

Dan Gazzard 25/02/2022
google

First class service for many years from a first class team. Highly recommended. Prompt, commercially aware, personable.

Been using Jack Ross for a number of years. Good clear advice and nice people to do business with.

Jack Ross is based in Manchester and provides tax planning and Xero accounts. They are a long-standing and well-regarded firm with an excellent reputation. They provide their clients with exceptional service and a wealth of advice. I have no hesitation in using their professional services.

aj shelton 22/12/2021
google

Jack Ross has been my accountants since I set up my business in 2016. From the outset I was helped with advice, support and encouragement. I cannot commend them highly enough. Always on hand to answer any question and responsive to any changes in the economy which might concern their clients. I don’t have to worry about the financial side of my business as all of that is taken care of and dealt with by Umar and the brilliant team. If you are looking for a top class accountancy firm which maintains the personal touch they are for you!

I would recommend this account, knowledgable and helpful

syra bano 16/11/2019
google

I can confidently recommend Jack Ross Accountants. They are continually improving their service, greatly benefiting our company as well as me personally. The team at Jack Ross have helped suggest and set up innovative accounting software, adding training and support. This alone has been a massive step towards having more control and understanding of our company finances.

J 13/08/2018
google

We have enjoyed a solid and constructive relationship with JackRoss and Can highly recommend them for accountancy services.

We have been working with Jack Ross for over two years and the service has been fantastic. They have a great and knowledgable team who have taken good care of us and our accounts.

Meeting to review annual accounts and discuss future plans. Very productive as they definitely talk my language - on reflection probably the best such meeting in recent years. Many thanks Umar and Jamie

Jack Ross has serviced my Personal Tax requirements for the last 5 years. During some complicated challenges their advice was excellent and the customer service second to none and left me with no doubt all was in hand.

Following a recommendation, I have used Jack Ross for all my accounting needs (including payroll) since the inception of my business over 12 years ago. The relationship has been completely hassle free and I greatly value their service, which goes well beyond preparation of accounts. Their tax planning advice has been really helpful and I have always felt that they have ‘got my back’. Can’t recommend them enough.

We have finally found the Accountancy firm that we have been looking for! We switched over to Jack Ross towards the end of last year and from the very first contact to the recent submission of our end of year accounts the service provided has been fantastic and has easily exceeded our expectations. Thank you!

oliver kirk 22/03/2018
google

Excellent service; very helpful people and work done much quicker than I expected.

Paul Clark 29/09/2017
google

I have used Jack Ross as my accountants for a number of years. Their service is professional and accurate. They deal with queries promptly and I can always get hold of the person I need to speak to. Their digital product has made a big difference to the efficiency of my business. I would not hesitate to recommend them.

Benjamin 22/02/2017
google

Jack Ross have been my family and business accountants and financial advisors for over 50 years. The delivery of services is second to none and i would recommend them to anyone. We have also built up great friendships over the years, above and beyond that of a normal business relationship which i value greatly.

Rob Cowan 22/02/2017
google

We have been looked after by jack Ross for a number of years. They have given us fantastic tax advise and helped our company grow from strength to strength. A & f

Fee Munshi 16/02/2017
google

Excellent advice and an understandable explanation of a very complex area of tax and corporate law which other (so called) advisors managed to totally confuse me. Thank you.

I have had a relationship with Jack Ross for several years and continue to be impressed by the proactive support and diligent advice received across the breadth of the firm. Excellent at signposting.

Holly Jones 14/02/2017
google

Jack Ross have acted for our law company for over 5 years and have been professional, prompt, and knowledgable in all aspects of our dealing with them.

Managing Purchase Orders in Xero

Tips and Strategies for Effectively Managing and Tracking Purchase Orders in Xero

As a professional chartered accountant using Xero accounting software, I understand the importance of efficient purchase order management. Here are some key tips to help you effectively create and manage purchase orders in Xero:

  1. Start by setting up supplier contacts in Xero. This will make it easier to select and link suppliers when creating purchase orders.
  2. Create purchase orders directly from bills or invoices. This ensures accurate tracking of expenses and helps maintain a clear audit trail.
  3. Utilise Xero’s inventory tracking feature to keep an eye on stock levels and automatically update purchase orders when inventory reaches a specified threshold.
  4. Regularly review and reconcile purchase orders with supplier invoices to ensure accuracy and avoid any discrepancies.
  5. Take advantage of Xero’s reporting capabilities to gain insights into your purchase order history, track expenses, and analyse spending patterns.
  6. Consider integrating Xero with other tools, such as inventory management or procurement systems, to streamline your purchase order processes further.

Remember, effective purchase order management is crucial for controlling costs, maintaining inventory levels, and building strong relationships with suppliers. By implementing these tips and utilising the features provided by Xero, you can enhance your purchasing efficiency and stay on top of your finances. 

Tracking Inventory 

Using purchase orders in Xero is a great way to track inventory for your business. When you create a purchase order, you can specify the items you need to order and their quantities, ensuring that you have accurate records of your inventory levels.

Once the purchase order is created, you can easily convert it into a bill or invoice when you receive the goods or services. This simplifies the process of recording inventory and ensures that you keep your records up-to-date.

Xero allows you to track the status of your purchase orders, making it easy to monitor the progress of your orders and ensure timely delivery. You can view the status of each purchase order, whether it’s pending, open, or completed.

With Xero’s purchase order feature, you can better control your inventory and streamline your purchasing process. It helps you stay organised, reduces the risk of stockouts or overstocks, and provides valuable insights into your business’s purchasing activities.

Using purchase orders in Xero is an effective way to track inventory and manage your purchasing process efficiently. It’s a valuable tool for any business that wants to maintain accurate records, avoid inventory shortages, and improve overall inventory management.

Customising Purchase Orders in Xero

Options for customising purchase orders to match your business’s branding and style

When using Xero Accounting software, customising purchase orders is a great way to showcase your business’s branding and style. Xero provides several options for customisation, allowing you to create professional-looking purchase orders that align with your company’s visual identity.

To begin customising your purchase orders in Xero, go to the “Settings” menu and select “Invoice Settings.” From there, click on the “Purchase Orders” tab. Here, you can choose a default template for your purchase orders or create a custom one.

Xero allows you to upload your business logo, choose your desired font and colour scheme, and even add additional fields or text to your purchase orders. This level of customisation ensures that your purchase orders reflect your brand and make a lasting impression on your suppliers.

Furthermore, Xero allows you to customise the numbering system for your purchase orders. You can select a prefix or suffix, specify the starting number, and even include alphanumeric characters.

By customising your purchase orders in Xero, you can reinforce your brand identity and maintain a consistent and professional appearance across all your business documents. It also enhances the overall customer experience, as suppliers receive visually appealing and easy-to-understand purchase orders from your company.

Xero’s customisation options for purchase orders provide you with the tools to create professional and visually appealing documents that align with your brand. Using these options not only improves the aesthetics but also strengthens your business’s overall image and credibility.

Approving and Sending Purchase Orders in Xero

Guidelines on how to authorise and send purchase orders to suppliers in Xero

It’s important to understand how to manage and send purchase orders to your suppliers effectively. Here is a simple breakdown of the main steps involved: 

  1. Access the Purchase Order module in Xero and review the details of the order, including the items, quantities, and prices.
  2. Ensure that the information is accurate and up-to-date. Make any necessary modifications or additions before proceeding.
  3. Once you are satisfied with the purchase order, click on the “Approve” button to authorise it. This step confirms your intention to proceed with the order.
  4. After approval, you can send the purchase order to your supplier. Xero provides various options for sending, such as email or printing the order and sending it via mail or fax.
  5. If you choose to email the purchase order, you can customise the email message and attach any supporting documents, such as product specifications or terms and conditions.
  6. Xero also allows you to track the status of the purchase order, providing visibility into whether it has been sent, received, or accepted by the supplier.

By following these guidelines, you can streamline your purchase order management in Xero and ensure efficient communication with your suppliers.

Send your supplier a purchase order with Xero

Receiving Goods and Updating Purchase Orders in Xero Accounting

Instructions on how to receive goods and update purchase orders accordingly in Xero

In Xero Accounting, the process of receiving goods and updating purchase orders is fairly straightforward. Here’s a step-by-step guide to help you navigate through the process:

  1. Open the Purchase Orders screen in Xero.
  2. Locate the purchase order that corresponds to the goods you have received. Click on the purchase order to open it.
  3. In the purchase order, navigate to the “Goods Received” section and click on the “Receive” button.
  4. Fill in the details of the goods received, including the quantity, unit price, and any additional information necessary. Make sure to accurately record the received items to maintain accurate inventory records.
  5. Once you have entered all the relevant details, click on the “Save” button to update the purchase order.
  6. The status of the purchase order will automatically change to “Received” in Xero, indicating that the goods have been received and recorded.
  7. If there are any discrepancies or issues with the received goods, you can make the necessary adjustments or contact the supplier for resolution.

By following these simple steps, you can effectively manage and update purchase orders in Xero Accounting, ensuring accurate inventory tracking and streamlined business operations.

Generating Reports and Insights from Purchase Orders in Xero

Utilising purchase order data to generate reports and gain valuable insights in Xero

In my experience as a Xero user, I have found that utilising purchase order data can provide valuable insights and help in generating comprehensive reports. By effectively managing purchase orders in Xero, you can streamline your procurement process and make informed decisions for your business.

Xero offers powerful reporting capabilities that allow you to analyse your purchase order data in various ways. You can generate reports to track purchase order status, monitor expenses, and analyse supplier performance. These reports provide a clear overview of your purchasing activities and can help you identify cost-saving opportunities or areas for improvement.

In addition to standard reports, Xero also allows you to create custom reports tailored to your specific needs. You can choose the data fields to include, apply filters, and customise the layout to focus on the information that is most relevant to your business.

By regularly generating reports from purchase order data in Xero, you can gain valuable insights into your procurement process. You can identify trends, analyse spending patterns, and make data-driven decisions. These insights can help you optimise your purchasing strategies, negotiate better deals with suppliers, and improve overall efficiency.

Leveraging purchase order data in Xero can provide you with comprehensive reports and valuable insights. By effectively managing and analysing this data, you can streamline your procurement process, make informed decisions, and drive success for your business.

Integrating Purchase Orders with Invoices and Bills in Xero

Exploration of how purchase orders can be seamlessly integrated with invoices and bills in Xero

In Xero Accounting, managing purchase orders is a vital part of the accounts payable process. By creating purchase orders, you can ensure accurate recording of purchases and streamline your invoice and bill management. Xero allows you to seamlessly integrate purchase orders with invoices and bills, making the entire process more efficient and organised.

When you create a purchase order in Xero, you can easily convert it into an invoice or bill when the goods or services are received. This integration eliminates the need for manual data entry and reduces errors.

With the integration, invoices and bills created from purchase orders will automatically reference the original order number, allowing for easy tracking and reconciliation. This ensures that the financial records are accurate and complete.

Additionally, Xero provides visibility into the procurement process by allowing you to view the status of each purchase order, invoice, and bill. You can easily track outstanding orders, monitor payments, and keep an eye on your cash flow.

By seamlessly integrating purchase orders with invoices and bills in Xero, you can efficiently manage your accounts payable process, reduce paperwork, and improve financial accuracy. This integration is a valuable tool for businesses looking to streamline their purchasing and payment processes.

Conclusion

Creating and managing purchase orders in Xero accounting is an essential practice for businesses looking to maximise their efficiency in the digital age. It helps in keeping track of orders, managing inventory, and maintaining financial accuracy. By using purchase orders, businesses can streamline their purchasing process, ensure timely deliveries, and have a clear record of expenses. Xero accounting software offers a user-friendly interface and allows for easy creation and tracking of purchase orders, making it a valuable tool for businesses of all sizes. If you want to maintain efficient procurement procedures and ensure financial transparency, incorporating purchase orders into your Xero accounting system is a smart choice.

Interested in Xero?

Get in touch

Ready to elevate your financial management with expert Xero accounting services? Fill out the contact form below and a JacRox team member will be in touch to guide you through your bespoke accounting solutions.

Umar Memon
A smiling woman sitting at a table with a laptop.
Call back form

Speak to a Xero Expert Today!

Take advantage of harnessing the full potential of Xero for your business. Whether you're a start-up, a thriving SME, or a larger enterprise, our Xero-certified accountants are ready to guide you through every step. Please fill out the form below, and let's begin your financial transformation.

Request a Call Back Now to get access to Xero experts 

You can view the status of each order, monitor inventory levels, and receive notifications when orders are received or partially fulfilled.

Yes, Xero provides the functionality to convert a purchase order into an invoice. This allows for a seamless transition from the purchasing process to accounts payable, ensuring accurate bookkeeping and record-keeping.

Absolutely! Xero offers integrations with various software systems, including inventory management and point-of-sale solutions. These integrations streamline the purchase order management process and enable real-time data synchronisation.

We were instantly impressed with their approach to accountancy

Mark Moppet | Managing Director

JacRox is transformational, saving us hours a week in mundane tasks, making life easier.

Duncan Ogilvie | Managing Director

On every occasion we’ve sent an enquiry they’ve been straight back to us with an answer

Paul Mulderrig | Managing Director

Providing an
outstanding client
service

Xero businesses we’ve helped achieve great things

Call back form

Speak to a Xero Expert Today!

Take advantage of harnessing the full potential of Xero for your business. Whether you're a start-up, a thriving SME, or a larger enterprise, our Xero-certified accountants are ready to guide you through every step. Please fill out the form below, and let's begin your financial transformation.

Request a Call Back Now to get access to Xero experts 

Get a Personal Consultation

Office

Jack Ross Chartered Accountants, Barnfield House, The Approach, Manchester, M3 7BX

Open Hours

Monday-Friday 8:30 am - 5 pm

Related Articles