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Everything You Need to Know About Purchase Orders in QuickBooks Online

If you run a business that orders products or materials, you’ve probably heard of purchase orders (POs). In QuickBooks Online, purchase orders can be a powerful tool to track your orders, manage inventory, and keep your vendors in the loop. Today, we’ll break down exactly what they are, why you should use them, and how to set them up and manage them in QuickBooks Online.

What is a Purchase Order?

A purchase order is a document your business sends to a vendor that outlines what you intend to buy. It includes details like:

  • Product or service description

  • Quantity

  • Price per unit

  • Total cost

  • Delivery date

  • Terms and conditions

Think of it as a formal request and agreement between you and your supplier.


Why Use Purchase Orders in QuickBooks Online?

Using POs in QuickBooks Online isn’t just about looking professional. Here’s why they’re a smart move:

  1. Clear Communication – Vendors know exactly what you’re ordering.

  2. Avoids Mistakes – Reduces errors in quantity, price, or delivery.

  3. Better Tracking – See open orders and follow up when necessary.

  4. Inventory Management – Helps track incoming stock.

  5. Financial Clarity – POs flow directly into your expenses once fulfilled.


How to Enable Purchase Orders in QuickBooks Online

By default, purchase orders aren’t automatically turned on. Here’s how to enable them:

  1. Go to Settings – Click the gear icon in the top right.

  2. Select Account and Settings – Then go to the Expenses tab.

  3. Enable Purchase Orders – Toggle the setting to “On.”

  4. Customize Your PO – Add your logo, company details, and default messages.


Creating a Purchase Order in QuickBooks Online

Once enabled, here’s how to create your first PO:

  1. Click the + New button in the left menu.

  2. Select Purchase Order.

  3. Choose the vendor you’re ordering from.

  4. Fill in product/service details, quantity, rate, and any notes.

  5. Save and either email it directly to your vendor or print it.


Tracking Purchase Orders

You can easily track your POs in QuickBooks Online:

  • Go to Expenses > Vendors to see vendor-specific POs.

  • Use the Purchase Order List report for an overview.

  • Filter by status: Open, Closed, or Partially Received.


Converting a Purchase Order to a Bill

When the vendor fulfills your order, you can convert your PO into a bill:

  1. Find the PO in QuickBooks.

  2. Click Copy to Bill.

  3. Review details and save.

This ensures your accounting is seamless — no retyping details.


Best Practices for Using Purchase Orders in QuickBooks Online

  • Always review quantities and prices before sending.

  • Keep PO numbers sequential for easy tracking.

  • Communicate with your vendor to confirm they’ve received the PO.

  • Regularly close out old or unused POs to keep your books clean.


Final Thoughts

Purchase orders in QuickBooks Online can save you time, reduce errors, and give you better visibility into your spending. Once you set them up, they integrate smoothly into your bookkeeping workflow — making life easier for both you and your vendors.

 
 
 

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