A purchase order is the document a buyer sends a supplier to say exactly what they want, in what quantity, at what price and by when. Many small businesses still place orders by phone or WhatsApp and sort out the paperwork later, which is where disputes start. This page gives you a free purchase order format in Excel and explains how to use it properly.
Download the free purchase order format (Excel)
What the template does
- Fill the yellow cells with your details, the supplier’s details and the items you are ordering. Everything else calculates by itself.
- Each line works out the taxable value after discount, the GST amount and the line total.
- Choose Intra-state or Inter-state once at the top. The totals then show CGST and SGST, or IGST, as the case may be.
- It has space for both GSTINs, HSN or SAC codes, a PO number, a PO date, the delivery date, the delivery address and payment terms.
- A terms block asks for the supplier’s quotation reference and says the goods must arrive with a delivery challan and a tax invoice quoting the PO number.
Twelve item rows are included. To add more, copy the last row down and the formulas come with it. The GST rate for each line is typed in by you, so the template never assumes a rate for what you are buying.
What a purchase order is, and what it is not
These documents are often mixed up. Here is who sends what.
- A quotation comes from the supplier: this is what we will charge. See our free quotation format.
- A purchase order comes from the buyer: we accept that price, please supply these items.
- A delivery challan comes from the supplier with the goods: this is what we are sending.
- A tax invoice comes from the supplier: this is what you owe us.
In a normal order the paper trail runs quotation, purchase order, delivery challan, tax invoice, payment. A PO sits in the middle and ties the rest together, which is why the PO number should appear on the challan and the invoice.
What every purchase order should contain
- PO number and date. Unique and in sequence, so no two orders ever share a number.
- Buyer details. Name, address, contact and GSTIN.
- Supplier details. Name, address and GSTIN.
- Item descriptions. Size, grade, model and specification. “Steel sheet 2 mm, 4×8 ft, IS grade” beats “steel sheet”.
- Quantity and unit.
- Agreed rate, discount and tax. Shown separately and matching the supplier’s quotation.
- Delivery date and delivery address. Especially if it differs from the billing address.
- Payment terms. For example, 30 days from the date of invoice.
- Quotation reference. So it is clear which price the order is based on.
- Authorised signature. Who at your end approved it.
Check the PO before you pay
When the goods arrive, compare three things: the PO, the delivery challan and the supplier’s invoice. The quantity received should match the quantity ordered, and the rate and tax on the invoice should match the PO. If any of the three disagree, sort it out before paying. This simple check is the main reason businesses raise purchase orders at all.
A few notes on GST
These are general points, not tax advice. Check anything specific to your business with your chartered accountant.
- Whether CGST and SGST or IGST applies depends on where the supplier is and where the goods are going. That is why the template asks for the supply type.
- Put the supplier’s GSTIN on the order, and ask them to quote your GSTIN and the PO number on their tax invoice.
- Each item has its own HSN (goods) or SAC (services) code and its own rate. Do not copy one rate down the sheet unless every line really carries it.
Common purchase order mistakes
- Ordering by phone and writing the PO afterwards. If the PO is raised after delivery, it records nothing.
- No PO number on the invoice. Matching becomes slow and payments get stuck.
- Changing quantity or price by message only. Any change should be confirmed in writing against the same PO number.
- No delivery date. A late delivery is hard to dispute when none was agreed.
- Vague descriptions. The supplier ships what is in stock, not what you meant.
When Excel stops being enough
Excel works for a handful of orders a month. It gets harder when several people raise orders, when you want to see which orders are still pending, or when you need the PO, the delivery and the invoice to line up without retyping. That is the work we build systems for: purchase orders raised from the same system as your quotations, orders, delivery challans, GST invoices and payment reminders. If that sounds like your week, see how our business management software works or talk to us.
Frequently asked questions
Who issues a purchase order?
The buyer. It is the buyer’s formal instruction to the supplier to supply the listed goods or services.
Is a purchase order legally binding?
Once the supplier accepts it, it can form a binding agreement on the terms written in it. For large or unusual orders, take advice before you sign.
Do I need a purchase order for small purchases?
Not for every small purchase. Many businesses set a limit above which a PO is always required, so bigger orders always have a record.
Can I edit the Excel template?
Yes. Add your logo, change the terms or add rows. Leave the formulas in the white cells alone so the totals keep calculating.
