How to Write a Purchase Order
The complete guide to creating clear, legally binding purchase orders that protect your business and keep production on track.
Joe Lauder·Founder, Kōbō·Updated Apr 22, 2026A purchase order is more than paperwork — it's a legally binding contract between you and your supplier. A clear, comprehensive PO protects both parties and prevents the disputes, delays, and quality issues that plague poorly documented orders.
Think of your PO as the single source of truth for every production order. It specifies exactly what you're ordering, quantities, prices, delivery dates, and terms. Once your supplier confirms acceptance, both parties are committed to those terms.
Essential PO Components
Every purchase order should include these elements. Missing any of them creates ambiguity that can lead to disputes or production errors.
| Element | Purpose | Example |
|---|---|---|
| PO Number | Unique identifier for tracking | PO-2025-0042 |
| PO Date | Issue date for record-keeping | January 15, 2025 |
| Vendor Info | Supplier name, address, contact | ABC Garments Ltd, Dhaka |
| Ship-To Address | Delivery destination | Your warehouse address |
| Style Details | Style number, description, color, size | ST-001, Crew Tee, Navy, M |
| Quantities | Units per size and color | 50/100/150/100/50 (size ratio) |
| Unit Price | Cost per unit with Incoterm | $4.50 FOB |
| Total Value | Complete PO amount | $2,025.00 USD |
| Ship Date | Required ex-factory date | March 1, 2025 |
| Payment Terms | When and how you pay | 30% deposit, 70% before ship |
Incoterms and Payment Terms
Understanding these standard trade terms is essential. They determine who pays for shipping, who bears risk during transit, and when payment is due.
Shipping Terms (Incoterms 2020)
| Term | Meaning | Who Pays Shipping |
|---|---|---|
| FOB | Free On Board | You pay; risk transfers at port of origin |
| CIF | Cost, Insurance, Freight | Supplier pays shipping + insurance to destination |
| Ex-Factory | At the factory gate | You handle everything from factory pickup |
| DDP | Delivered Duty Paid | Supplier handles all shipping and customs |
Payment Terms
| Term | Meaning | When to Use |
|---|---|---|
| T/T | Telegraphic Transfer (wire) | Standard for most orders |
| L/C | Letter of Credit | Large orders; bank-guaranteed |
| Net 30 | Payment due in 30 days | Established relationships only |
| 30/70 | 30% deposit, 70% before ship | New supplier relationships |
The PO Process Workflow
Follow this step-by-step process for every production order to maintain control and documentation throughout.
Get Quote. Request pricing from supplier based on your specs, tech pack, and target quantities. Compare quotes if working with multiple suppliers.
Negotiate Terms. Finalize pricing, MOQs, delivery dates, payment terms, and any special requirements before issuing the PO.
Issue PO. Create and send formal purchase order with all details. Reference the approved sample and tech pack version.
Get Confirmation. Supplier reviews and confirms acceptance within 48 hours. Any requested changes require a revised PO.
Pay Deposit. Release deposit payment per agreed terms. Keep wire transfer receipts for your records.
Track Production. Monitor progress against ship date. Request weekly updates for orders over 60 days.
Inspect & Ship. Conduct quality inspection before shipping. Pay balance only after QC approval.
Receive & Reconcile. Check delivery against PO quantities and specs. Document any discrepancies and close the order.
What to Specify on Every PO
Product Details
Commercial Terms
Logistics
Common PO Mistakes
Vague specifications — "Navy blue" without a Pantone reference leads to disputes. Always be specific with colors, materials, and measurements.
Missing ship date — No date means no leverage if delivery is late. Always specify ex-factory or arrival date.
Wrong Incoterms — FOB vs. CIF dramatically affects who pays shipping and bears risk during transit.
No tolerance clause — Production rarely hits exact quantities. Specify acceptable over/under range (typically ±2–3%).
Unsigned confirmation — Without supplier confirmation, they aren't legally committed to your terms.
No sample reference — Always specify which approved sample and tech pack version the PO is based on.
PO Amendments and Revisions
Orders sometimes need to change after the PO is issued. Handle changes properly to maintain clear documentation and avoid disputes.
Final Thoughts
Treat your PO as the contract it is. Be specific, be complete, and get confirmation. The brands that maintain rigorous PO documentation are the ones that ship on time, on spec, and on budget.
A well-written purchase order is your best protection against production problems. The time spent getting it right upfront saves weeks of disputes and thousands in unexpected costs.
Joe's the founder of Kōbō Labs. Before this, he founded Satta, a fashion brand he scaled to sell internationally at Mr Porter, SSENSE, and Beams Japan. A decade of running his own brand — design, suppliers, production, the lot — is what Kōbō is built on.
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