How to prepare Purchase order
Friday, June 16, 2017     Category : For Beginners

The information provided here is part of Export Import Training online


Procedures to prepare Purchase Order.


In this article, let us discuss about Purchase order in international trade. What is Purchase order? Who prepares purchase order? What is the importance of purchase order? How is purchase order prepared?


I have already discussed about dispatch of export samples and other steps to be taken to procure export order in other articles in same website.


Now let me explain about purchase order. How does purchase order work?


Once after approval of your sample by overseas buyer, the next step is on negotiation price of sale. You can quote your price of goods with all terms and conditions of sale. Once after approving each other on price of goods, terms of payment, terms of delivery and all other conditions on the sale, you send a ‘Pro forma Invoice’ to overseas buyer. Pro forma Invoice is nothing but a commitment of sale by seller to buyer with the terms and conditions of sale. Please note, the pro forma invoice is only a binding agreement but not a commercial Invoice. Based on pro forma invoice, buyer prepares ‘sale contract’ with complete terms and conditions of contract. Then the said contract is sent to you duly signed by your buyer. Once after receiving the contract of sale you sign and return back a copy to your buyer as a proof of acceptance of sale contract by you. Once after receiving the contract of sale by buyer, he places the order or arrange with his bank to open a Letter of Credit which ever agreed by both agreed.



What are the contents of a purchase order?


As I have explained above, purchase order is prepared on the basis of mutual agreement between buyer and seller. Some of the contents of purchase order are product specification, price, terms of delivery, terms of payment, mode of transport, validity of shipment etc. Since the seller has to supply his goods on the basis of purchase order, all terms and conditions to supply goods are mentioned in a purchase order.


Who signs purchase order?


Since purchase order is prepared by buyer, obviously buyer signs a purchase order. However in most cases, buyer sends purchase order to seller and requests him to sign and sends back to buyer as a proof of acceptance of such purchase order.


Can a purchase order be amended by buyer?


Purchase order can be amended before effecting shipment, but with mutual understanding between buyer and seller. If any amendments on purchase order, a revised purchase order has to be sent to seller with such amendments.


Should an export purchase order have buyer’s bank details?


An export purchase order need not have buyer’s bank details. However, bank details of overseas buyer are ideal to mention in an export purchase order. Bank details of buyer help supplier at different levels of export process. If credit period is involved, buyer may approach an export credit guarantee agencies for insurance cover against such buyers on credit worthiness. In such cases, seller may require buyer’s bank details to apply with such credit guarantee insurance agencies for approval of buyer’s credit worthiness. The buyer’s bank details are to be mentioned in a bill of exchange to send to buyer for acceptance.


For the purpose of sending shipping documents to buyer through his bank, the details of bankers of buyer are mandatory.


I hope, I have explained about purchase order in simple language to understand easily.


You can share your experience in handling export purchase order.


The above information is a part of Import Export online Training


Comment below your thoughts about export purchase order below:


 Other details on how to import export 


How to prepare an Export Packing list. Contents of Export Packing list

 How to prepare an Export Invoice. Contents of Export commercial Invoice:

 Difference between exports and re-exports

Difference between importer and Consignee

What is legalization of documents by embassy?

Is Letter of Credit LC safe for an Importer?

Excise and Customs - Click here to read complete notification under Budget 2014

How to get Export Orders?

How to settle dispute in Exports and Imports?

Click here to know India Trade Classification(ITC)

Click here to know HS code of other product/commodity

Pre shipment bank finance to suppliers for exports through other agencies

Types of export containers
Measurement of export containers
Foreign Trade Policy of India 2015-2020
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

How to calculate chargeable weight under airfreight in exports?

How to check the time of contract on high sea sale transaction?

How to Choose a product for export business

How to cover the risk of Cargo loss or damage

How to customs clear Cargo arrived in a port where in import license obtained for another port

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How to differentiate CPT and DAP in shipping terms

How to divert cargo from one port to another?

How to file bill of entry Manually. What is manual filing of Import Documents?

How to file Bill of Entry on line? What is called Noting in bill of entry

How to get exemption of Sales Tax under exports.

What happens if overseas buyer not paid export bills discounted.

What happens if proper tracking of goods not effected in export import business?

What happens if your buyer rejects cargo? What are the major problems if consignee not taken delivery of cargo?

How to get export order from foreign buyers?

How to get RCMC from Export Promotion Councils

How to hide invoice value of original contract under high sea sale transactions

How to know the quality, quantity or contents of goods before import customs clearance

How to know volume of LCL cargo if not measured at factory

Transferability of Bill of Lading

Transhipment - A redefinition

Travelers to India under import duty exemption, Frequently Asked Questions Part 2

Triangular export

Types of Insurance Documents.

How to make DA mode of payment safe

How to make delay in delivery of Shipment?

How to minimize import cargo clearance time? An open logic proposal to WTO

How to obtain a duplicate BL, if original bill of lading lost.

How to obtain GSP - Certificate of Origin?


Rajesh Says :
Wednesday, February 05, 2014
Very nicely described....Good luck!
Sandeep Says :
Wednesday, February 12, 2014
Informative and beneficial for beginners, Thank you
Murshid Mohamed Says :
Tuesday, August 09, 2016
I expect your advice and suggestion. I need to buy O-General AC, directly from the chennai sea port or any other port in southern India. How i can approach them? How i can buy? How to get the details? Did you have any contact point to get this information?
Atul Dusane Says :
Sunday, November 20, 2016
Thank you very much for your blog about "How to Export Import". I am new in the field of export and Import. I use to refer your site for my every doubt and queries.Its very helpful for new entrepreneurs like me.I want to know that where we can get the sample Pro-forma Invoice, Commercial Invoice, Purchase Order and any other related documents related to export import business .Thanks a lot again for your wonderful initiative to share your great ideas, thoughts and knowledge for young entrepreneurs.

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