A Guide to Purchase Order Process for Your Amazon Business

Learn best practices for your Amazon purchase order process in this guest article from Kickfurther.

Purchase orders are a crucial component of how your Amazon business operates. Purchase orders (also referred to as POs) provide legal safeguards, optimize the procurement process, and ensure suppliers deliver the correct goods promptly. They assist in managing inventory, controlling budgets, and confirming payments. Your purchase order process is vital for efficient purchasing and maintaining effective supplier relationships.

Why are Purchase Orders Important?

Key benefits of purchase orders are inventory oversight, financial management, and ensuring supplier reliability. They enable your Amazon business to accurately monitor inventory requirements by detailing the specific amounts and types of products or materials needed, facilitating effective stock management. POs ensure that suppliers fulfill their commitments by delivering the correct items, at the agreed price and schedule.

Additionally, POs serve as crucial records that simplify the procurement process, authenticate transactions, aid in regulatory compliance and audits, allow for future planning, and improve the overall effectiveness of your purchasing cycle.

Types of Purchase Orders

Standard PO: This is the most frequently used PO. It's applied to single-instance buys of products or services. A standard PO details the amount, cost, delivery schedule, and conditions for an individual transaction.
Blanket PO: A blanket purchase order is used for ongoing or repeated acquisitions from a particular vendor over a defined timeframe, typically spanning a year. It sets forth the terms and conditions for numerous orders, simplifying the buying process and guaranteeing uniformity.
Contract PO: A contract purchase order represents a lasting arrangement between a purchaser and a vendor. It usually spans a considerable duration and encompasses comprehensive terms, costs, and stipulations. Contract POs cater to sustained partnerships that require adaptability regarding quantities and delivery timelines.

Prepping Your Purchase Order Process

The preparation for processing purchase orders includes recognizing the needs of your Amazon business, choosing dependable suppliers, negotiating conditions, and drafting comprehensive purchase orders that specify items, quantities, costs, delivery schedules, and payment conditions.

Following a thorough internal review and obtaining necessary approvals, the purchase order is sent to the supplier, who then confirms receipt of the order. When the goods or services are received, they are inspected and verified against the purchase order details. Subsequently, the supplier's bill is checked for precision before the payment is processed. Maintaining meticulous records is crucial, and continuous management of supplier relationships ensures they meet the expected standards for quality, delivery time, and cost. These collective actions promote effective purchasing, budget management, and regulatory compliance.

A Guide for Processing Purchase Orders

1. Creating a Purchase Order: Start by determining the requirement for goods or services in your Amazon business. Create a purchase order that outlines specifics like the descriptions of items, quantities, prices, expected delivery dates, and terms of payment.

2. Review and Approval: Before sending the purchase order to the vendor, submit it to any internal evaluators who need a say, such as your finance department, to verify that the procurement is following budget limitations and the operational requirements of your business.

3. Transmitting the Purchase Order: After receiving approval, send the purchase order to your supplier. This can be done via email or another electronic message or within a shared inventory management software tool, based on the procurement system you use.

4. Purchase Order Tracking and Management: Maintain a log of all your purchase orders, monitoring their progress, expected delivery timelines, and any alterations or updates. This practice is crucial for ensuring transparency and effectively handling relationships with your suppliers.

5. Invoice Matching and Payment: Upon receipt of goods or services, compare the supplier's invoice against the purchase order and the receipt of the goods. Ensure the invoice corresponds with the pre-established terms and quantities. Then process the payment quickly to uphold a good relationship with the supplier.

6. Closing Purchase Orders: After fulfillment, mark the PO closed in your procurement software. This action aids in maintaining precise records and halts any additional activities associated with that particular purchase order.

Additionally, sustain clear communication with suppliers which helps to secure advantageous terms through negotiation. Consistently assess supplier performance to guarantee sustained quality and efficiency.

Adhering to these procedures guarantees a precise and efficient system for processing purchase orders, which is crucial for successful procurement and financial management within your Amazon business.

Purchase Order Financing

Purchase Order financing is a short-term funding solution that can help your Amazon business fulfill customer orders when you lack the necessary working capital. A financing provider will assess the purchase order and customer's creditworthiness, and then provide funds to cover production or procurement costs. After fulfilling your order, your business repays the financing provider once the customer pays for the products, helping bridge cash gaps and enabling order fulfillment. PO financing is valuable for businesses with cash flow constraints or when handling large orders, allowing them to meet customer demand and grow without financial obstacles.

Kickfurther is the first online inventory funding platform, offering small businesses access to purchase order financing, inventory financing, and e-commerce inventory financing, which may be difficult to get through conventional channels. Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control for businesses with annual revenues from $400,000 to $25 million, that sell physical products or non-perishable consumables.

Kickfurther Can Help with Your Purchase Order Process

Purchase orders help to establish a formal process for businesses to order goods or services from vendors, and with Kickfurther purchase order financing, companies can obtain the funds needed to fulfill these orders. This combination allows businesses to fine-tune their inventory, satisfy customer needs, and sustain a robust cash flow. The collaboration of purchase orders and Kickfurther's inventory financing promotes efficient supply chain operations and facilitates business expansion.

If you’re interested in getting funded at Kickfurther, here are the easy steps to get started: