Purchase orders: worth the paperwork, or not?

A purchase order is a written record of what a venue has asked a supplier to deliver, in what quantity and at what price. In a large business it is routine: nothing is bought without one, and nothing is paid unless the invoice matches it. In most restaurants it is rare. Orders are placed by phone, by text, in a supplier's app or by a sales rep who calls on a Tuesday, and the only record is the delivery itself and the invoice that follows.

Both approaches have defenders. Purchase orders catch mistakes that cost real money: wrong quantities, wrong prices, duplicate orders and invoices for goods that never arrived. They also take time, and in a kitchen where the person ordering is also cooking, time is the scarcest thing there is. The question is not whether purchase orders are good in principle, but whether they pay for themselves in your venue.

This guide sets out what purchase orders prevent, what they cost, the venues where they clearly pay and the venues where a standing order guide does the same work with less paperwork. Every figure in it is an example.

A purchase order is the buyer's document. It states what was ordered, from whom, for which delivery date, in what quantity and at what agreed price. It is created before the goods arrive, and it becomes one side of a three-way check: the order, the delivery and the invoice.

It is not the supplier's confirmation, though a supplier's written confirmation can serve much the same purpose. It is not the delivery note, which records what the supplier says it sent. And it is not the invoice, which records what the supplier says you owe. The value of the purchase order is that it is yours: it records what you asked for, independently of what the supplier did. Wikipedia's article on purchase orders covers the general practice.

Five problems are much harder to catch without a written order.

Each of these happens in kitchens without anyone acting dishonestly. They are the ordinary errors of a busy trade, and the purchase order is the record that makes them visible.

The cost is time, and it is easy to underestimate. Writing an order takes a few minutes. Sending it, keeping it, checking the delivery against it and then checking the invoice against both takes more.

A rough example. A venue with eight suppliers places 20 orders a week. If each order takes five minutes to write and send, and another five to match against the delivery and the invoice, that is 200 minutes a week, more than three hours. In a kitchen where the head chef does the ordering, those are three hours of a well-paid person's time, every week.

Whether that is worth it depends on what the orders catch. If they catch one short delivery and one price discrepancy a week, each worth more than the time spent, they pay. If they rarely catch anything, they may be costing more than they save.

The real value of a purchase order appears when it is matched with the two other documents.

If all three agree, the invoice is paid. If they do not, the difference is resolved before payment: a credit for the short delivery, a correction for the wrong price. Our guides to the goods received note and to supplier invoices cover the second and third documents in detail.

Without the purchase order, only a two-way match is possible: the delivery against the invoice. That still catches short deliveries, but it cannot catch a price that differs from what was agreed, or a delivery of something that was never ordered.

To see what the paperwork buys, follow one invented week through a venue that orders from five suppliers.

Without written orders, the head chef phones the butcher on Monday for "the usual plus extra short rib for the weekend". On Wednesday, the delivery arrives with 8 kilograms of short rib rather than the 6 the chef had in mind, at a price a little above what was quoted on the phone two months ago. The sous chef signs for it during prep. The invoice arrives the following week and is paid as it stands. Two kilograms of extra rib sit in the freezer, and the higher price becomes the new normal without anyone noticing.

With a written order, the same week looks different. The order says 6 kilograms at the agreed price per kilogram. The sous chef checks the delivery against it at the door, notes the 2 extra kilograms, and either sends them back or accepts them knowingly. When the invoice arrives, the price is checked against the order, the difference is spotted, and the supplier is asked to correct it or explain it.

Neither outcome is dramatic. The difference is a few kilograms and a few per cent. But the same pattern repeats across every supplier, every week, and over a year it adds up to a sum that pays for the paperwork several times over in some venues and barely at all in others. The question is which kind of venue yours is.

Much of the money a purchase order protects comes back as credit notes: the supplier's acknowledgement that you were charged for something you did not receive, or charged the wrong price. Without a written order and a checked delivery, credit notes are hard to claim and easy to forget.

With them, the process is simple. The shortfall or the price difference is noted at delivery or at invoice matching, the supplier is told the same day, and a credit note is requested with the order number and the delivery note attached. Keep a short list of credits requested and credits received, and check it every week. A credit that was agreed but never arrived is money still owed to you.

Purchase orders are most clearly worth their cost in venues with several of these features:

In those settings, the order is not paperwork for its own sake. It is the only record of what was agreed, and it protects both the venue and the supplier.

Many small venues have one person who orders, a handful of suppliers who deliver the same things most weeks, and prices that change only occasionally. In that setting, a full purchase order for every delivery is often more paperwork than the problems it prevents.

A standing order guide can do most of the same work. It is a single list of everything the venue buys, by supplier, with the usual quantity, the par level, the unit and the agreed price. The person ordering works down the list, notes the quantity for each line, and sends it. The list itself, dated and kept, becomes the record of the order.

What the guide does not do well is record one-off orders, price changes agreed on the phone, or orders placed by someone else. If those are rare, the guide is enough. If they are common, the venue probably needs purchase orders after all.

An order guide works if it is quick to use and kept up to date. A useful layout has one section per supplier, in the order the person ordering works through them, and these columns for each line:

Our guide to par levels explains how to set the par column. Keep the guide dated each time it is used, and keep the used copies for a few months: they are the record that lets you check deliveries and invoices.

In practice, many venues use both. Suppliers with stable, repeated orders and prices are ordered from the guide. Suppliers with expensive goods, changing prices or frequent problems get a proper purchase order every time.

A common split puts produce, dairy and dry goods on the guide, and meat, fish, wine and spirits on purchase orders. The split follows the money: the more expensive the goods and the more variable the price, the more a written order is worth.

If you use purchase orders, keep them short and complete:

A template in a spreadsheet, a shared document or an ordering tool is enough. Most suppliers will put your order number on their invoice if you ask, which makes the matching much quicker.

Purchase orders give a venue a natural place to set authority. Decide who may place orders, with which suppliers and up to what value, and who must approve anything above it.

A simple scheme for a single venue: the head chef orders food, the bar manager orders drinks, and anything above a set amount, or from a new supplier, needs the general manager's approval. In a group, the limits may be set centrally. Write the scheme down. An order placed outside it should be the exception, and visible.

Many orders are not written by the venue at all. They are placed by phone, through a supplier's app or with a rep. These can still leave a record.

These confirmations do the job of a purchase order if they are kept and used to check the delivery and the invoice. The record matters, not the format.

The paperwork is only useful if it is used in the right order. A weekly routine that works in many kitchens:

In a group of venues, purchase orders do more work. They let a central buyer see what each venue is ordering, enforce agreed prices across all venues, and stop venues ordering from suppliers outside the group's agreements. They also make it possible to compare what each venue spends on the same items.

The cost is more paperwork at each venue, and a risk that orders slow down if every one needs central approval. Most groups solve this with limits: venues order freely from approved suppliers at agreed prices, up to a value, and anything outside that needs approval. Our guide to multi-venue operations covers what else to centralise.

Purchase orders work on paper, in a spreadsheet or in purchasing software. Paper is quick to start and easy to lose. A spreadsheet is easy to keep and search, and works well for one venue with a few suppliers. Software earns its cost when there are many suppliers, many orders and several people involved, especially if it can connect orders, deliveries and invoices without retyping. Our guide to moving from a spreadsheet to inventory software covers the signs it is time.

Whatever the format, the test is the same: can you find, within a minute, what was ordered for a particular delivery and at what price?

Ordering, deliveries and supplier invoices are back-of-house paperwork, and servearound does not raise purchase orders, record deliveries or hold supplier invoices today. Inventory tracking, for the stock behind the menu, is coming. Until then, the order guide and any purchase orders stay in your own spreadsheet or purchasing tool.

servearound does hold the other side of an order: what was sold. The menu report in Analytics shows units sold for every dish and category over any range of dates, which is the history behind sensible par levels and order quantities. If you would like to see it, get in touch.

Not always. A venue with one person ordering, a few suppliers and stable prices can often use a standing order guide instead. Purchase orders earn their cost when several people order, prices are agreed in advance, or disputes are common.

The purchase order is the buyer's record of what was asked for and at what price, written before delivery. The invoice is the supplier's record of what is owed, sent after delivery. Matching them catches price and quantity differences.

Checking the purchase order, the delivery note or goods received note, and the invoice against each other before paying. If all three agree, the invoice is paid; if not, the difference is resolved first.

A single list of everything a venue buys, by supplier, with units, par levels and agreed prices. The person ordering works down it and notes quantities, and the dated copy becomes the record of the order.

Yes. Ask the supplier to confirm in writing, keep app confirmations, or write down what was agreed. Without a record, neither the delivery nor the invoice can be checked properly.

Those with expensive goods and variable prices: meat, fish, wine and spirits, usually. Produce, dairy and dry goods often work well from a standing guide.

At least until the invoice is matched and paid, and usually for as long as your accounts and any supplier disputes need them. Ask your accountant how long your records must be kept.

Yes. A written order shows exactly what was asked for, which makes a claim for a short delivery or a wrong price much easier to settle.

Yes, if the message is kept and includes the items, quantities, prices and delivery date. What matters is that a written record exists and can be found when the delivery and the invoice need checking.

Keep your own record of each order anyway and check deliveries and invoices against it. The value of the order is that it is your record of what was agreed, whether or not the supplier uses it.

Purchase orders record what you asked for and at what price, so deliveries and invoices can be checked against something other than memory. They prevent wrong quantities, price drift, unauthorised spending, duplicate orders and invoices for goods that never came, and they cost time: in this guide's example, more than three hours a week for a venue placing 20 orders.

They pay where several people order, prices are agreed, goods are expensive or disputes are common. Where one person orders a stable list from a few suppliers, a dated order guide with pars and agreed prices does most of the same work. Many venues use both, split by how expensive and variable each supplier's goods are, and whatever the format, they check every delivery at the door and every invoice against the order.