A BPO must naturally define several contract terms: Once accepted, it then becomes a legal document and binding contract. A PO is an offer from a client business to purchase from a supplier. It’s important to note that a purchase order is not necessarily the same as a contract. What’s Included in a Blanket Purchase Order? General Services Administration even has its own documentation. Many of these large organizations have protocols in place for handling blanket orders. Once the shipments are underway, the buyer must monitor the received goods to check that the quality and quantity are correct according to the agreement.īlanket purchase orders are used by a variety of organizations, from commercial companies to universities and municipalities. This special type of purchase order works best when you know the exact price and order volume you need ahead of time, and can trust that those parameters won’t change for the entire period. This way, the buyer takes advantage of keeping the same unit price for the whole contract (thus minimizing risk of price fluctuation), while the seller can guarantee sales throughout the extended period. For example, a construction company with regular scheduled work must order the same raw materials every so often, or an office building might need cleaning services every few weeks.īoth sides agree on a set price and an order period. The result is less invoice processing time and a more consistent delivery schedule. Such an order greatly simplifies logistics and planning for both companies, as multiple invoices can be categorized under a single blanket PO. What is a Blanket Purchase Order?Ī blanket purchase order, a long-term contract with a specific supplier, helps businesses efficiently order the same shipment of goods from a single vendor at regular intervals. Read on to learn how to make blanket purchase orders work for your business’s purchasing and procurement processes. We’ll also include some best practices and other tips to issue purchase orders in the most efficient way.īlanket purchase orders will increase the efficiency of your accounts payable process, which many businesses identify as a pain point. This guide will provide a comprehensive dive into the concept, as well as the general context and process around it. A blanket purchase order (BPO), also known as a standing purchase order, can be an extremely valuable type of PO to get familiar with.
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