Forum Moderators: buckworks
Is there anyone out there that is accepting purchase orders and has a procedure in place for doing so?
Specific questions would be:
Do you only ship if you have received payment?
Do you ship when you receive the actual purchase order then invoice later?
Do you have any special forms for purchase order customers to download and use?
Do you open some sort of credit account we these type of customers?
Purchase orders can be great, but they're also a pain to deal with, given that people who issue the purchase orders usually have different goals from the accountants who actually pay.
With companies you'll have to deal with the overhead of chasing their accounting departments for payment. Can be a pain in the rear at times.
If it is a special order .. i.e. you have to pay the distributor for it and it is not in your inventory, sometimes it is just worth it to request payment or a deposit in advance to cover your risks.
My answer to your question would be... depends on your ability to handle the risk and the types of products / services you sell.
A good friend of mine had an accountant call him and challenge why the product was so expensive... claiming they could have bought it cheaper somewhere else. This was from a large and well known music label who wanted to get some custom printing done.
We do have a couple of special rules about special order type items, but otherwise no biggy. Be aware that the biggest companies are the slowest to pay - took 75 days to get paid by General Electric :(
We did bill them and get paid for the interest though :P
I would only extend Net terms to customers that I hav a working relationship with already. You have to consider if you can adjust not having cash for those sales for 30, 60, or 90 days. It would also depend on your margins. If you are able to charge retail prices then it might be worth your time. For me, its not worth the time.
> has a procedure in place for doing so?
It depends on the software you use. Our software let's us leave an order with a balance due. And then just run a report based on payment method (PO) and balance due greater than 0.
> Do you only ship if you have received payment?
Yes.
> Do you ship when you receive the actual
> purchase order then invoice later?
For me, PO must be accompanied with credit card or pre-paid company check.
> Do you have any special forms for purchase
> order customers to download and use?
I fax them or send a PDF of the final checkout screen to include with their PO.
Do you only ship if you have received payment?Do you ship when you receive the actual purchase order then invoice later?
Do you have any special forms for purchase order customers to download and use?
Do you open some sort of credit account we these type of customers?
We accept purchase orders for wholesale purchases. We do not grant credit terms to anyone, so payment is due either upon shipment (credit card) or receipt (COD).
We're not a bank and don't have the time, resource or inclination to deal with granting terms. (In our industry, most vendors use a factoring company that is willing to accept the credit risk in return for a few points on each invoice.)
For me, getting purchase orders from universities is a way to increase the reputation for my products. I think that depends on the nature of your product, though. If I were selling photocopiers, that wouldn't be the case. About a third of the products I sell, though, can be used for research purposes. Researchers often ask me for specialized information about the widget involved, but I am happy to run it down for them. This is not a big profit area for me but instead an occasion for learning, networking, and increasing my rep. Might not be worth it for some businesses.
Put the invoice in with the shipment and make it clear that the payment is "Net 30 Days", or what ever terms are acceptable. Net 30 is standard.
Government and Institutional PO's are the best. PO's from very large companies are also acceptable. Be careful with PO's from small companies you have never heard of, anyone can make a PO with M$ Word.
Most corps have credit cards nowadays so it doesn't come up that often.
All PO orders must first be phoned in to us for approval. If in doubt, we reject it. We don't export.
We've had zero losses on POs from the web. But we know what we're doing.
Over the years we've had some tiny publicly traded corps that trade on the U.S. Over The Counter Bulletin Board or Pink Sheets ask for credit. We always reject those.
Absolutely true, and they like air miles.
Most governments have credit cards and the military does too.
In regards to the purchase orders:
The POs I am concerned with are mainly for schools. We have a soft spot for schools for the same reasons as mentioned in one of the reposnes above. We would like to help them out and build a reputation with them.
Since posting this question I have set up a fax system which seems to be working out.
I think I will take the advice of one of the other responses and ship only after receiving payment. The schools that are ordering don't seem to be in too big a rush to get the product.
I think a step by step PO instruction page is probably in order somewhere in our purchase path.
Thanks again.
Maybe you have been using one of the other "internets".
Our payment processor, 2CO doesn't handle POs - well, they barely handle the payments properly.
Mr Bo
I think there's a market out there for a 'third party' PO acceptor/handler.
Factors fill that role, at least in my industry.
They take on all the credit risk and take a cut of the invoice.
