Glossary

QuickBooks Purchase Order

A QuickBooks purchase order is a record of what you have committed to buy from a vendor, holding the vendor, items and quantities without changing any account balance until you receive the goods and turn it into a bill or an expense.

Also called: purchase order, PO, QuickBooks PO, open purchase order

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Definition

QuickBooks tracks money leaving your business in three steps, and only two of them are accounting. The purchase order says what you agreed to buy. The bill says you now owe for it. The bill payment says you paid. Intuit puts the first step in one sentence: purchase orders tell vendors you intend to buy specific products in specific quantities.

The purchase order is the step that changes nothing. No expense is recorded, no payable is created, and no report moves, because at that point nothing has been received and nothing is owed. What exists is a commitment, and a commitment is not a transaction.

That is also why people go looking for it and cannot find it. Purchase orders are only available in QuickBooks Online Plus and Advanced, and even there the feature ships switched off. If your Create menu has no Purchase order option, you are either on the wrong plan or one setting away from having it.

Key points

+Intuit: purchase orders tell vendors you intend to buy specific products in specific quantities.
+Available only on QuickBooks Online Plus and QuickBooks Online Advanced.
+Turned on under Account and Settings, in the Expenses tab, with the Use purchase orders switch.
+It posts nothing: no expense, no accounts payable, no change to profit and loss.
+A new purchase order has a status of Open, and QuickBooks closes it automatically once all quantities are added to bills, expenses or checks.
+You can set the status back to Open by hand from the purchase order itself.
+Acodei writes no record that could become a purchase order, and none that resolves against one.

Where it sits in the money-out chain

Follow a single order through QuickBooks and the division of labour is obvious.

You raise a purchase order for 200 units at 4.00 each. Nothing happens to your books. Your profit and loss is unchanged, your accounts payable is unchanged, and your vendor owes you goods rather than you owing them money.

The shipment arrives and you enter the bill, adding the purchase order to it. Now the accounting happens: 800.00 lands in the expense or inventory account the items point at, and 800.00 lands in accounts payable. Intuit describes adding the purchase order to the transaction as the step that closes the original purchase order, connects it to the bill or expense, and records the accounting accurately.

You pay the bill, and accounts payable clears against your bank account.

The purchase order is not a weaker version of the bill. It answers a question the bill cannot answer, which is what you are committed to spend before anyone invoices you for it.

Turning it on, and why you might not have it

Two things have to be true before a purchase order exists in your file.

The first is your plan. Intuit states that purchase orders are only available in QuickBooks Online Plus and QuickBooks Online Advanced. On Simple Start or Essentials there is no setting to find.

The second is the setting itself. Go to Account and Settings, open the Expenses tab, find the Purchase orders section, and turn on the Use purchase orders switch. Until that is on, the Purchase order option does not appear when you create a transaction.

That second step is the one that catches people who have just upgraded. Moving from Essentials to Plus does not switch the feature on for you, so a file can be on the right plan and still have no purchase orders anywhere.

Open, closed, and the pile that builds up

Every purchase order carries a status, and the status is the whole tracking mechanism.

A new purchase order is Open. QuickBooks Online automatically closes purchase orders when all quantities are added to bills, expenses or checks, so in the ordinary case you never touch the status at all. Receive the goods, enter the bill from the purchase order, and it closes itself.

Partial deliveries are where it gets interesting. If you ordered 200 and 150 arrive, adding the bill for 150 leaves the purchase order open for the remainder, which is the behaviour you want. It stays on your open list until the rest shows up.

The problem is the order that never completes. A vendor discontinues an item, a project gets cancelled, and the purchase order sits Open forever, quietly overstating what you are committed to buy. Since it posts nothing, no reconciliation will ever catch it and no accountant reviewing your profit and loss will see it. The only cure is looking at the open list and closing what is dead. You can change the status by hand from the purchase order itself, using the status dropdown next to the vendor, and the same control puts a closed purchase order back to Open if you closed one too early.

What it means for reporting

Because a purchase order posts nothing, it appears on none of the three statements. It is not an expense, it is not a liability, and it does not reduce your cash. A month with 90,000 in outstanding purchase orders and a month with none look identical on a profit and loss.

For most reporting that is correct and unremarkable. You have not spent the money, so it should not be in your numbers. Accrual accounting recognises an expense when the obligation exists, and ordering something is not yet an obligation to pay.

Where it matters is cash planning, and this is the reason to keep the open list clean rather than treat purchase orders as paperwork. The open purchase order list is the only place in QuickBooks that answers what you have already committed to spend but not yet been billed for. If that list is accurate, it is a genuine forward view of cash going out. If it is full of dead orders nobody closed, it is worse than having no list, because it looks authoritative.

The sales-side equivalent of a record that holds detail without posting is the delayed charge, and the reasoning behind non-posting documents is worked through there rather than repeated here.

Where Acodei fits, and it is a boundary

Nothing in Acodei's product documentation covers QuickBooks purchase orders. There is no documented behaviour for reading them, for creating one, for adding one to a bill, or for noticing that an open purchase order exists for a vendor. This entry is not going to invent one.

The reason is structural rather than a gap someone forgot to fill. Acodei syncs money that has already moved through Stripe, and a purchase order records a commitment made before any money moves. Every record Acodei is documented to write starts after the fact: a sales receipt or payment for a charge that succeeded, a refund receipt for a refund that was issued, a deposit for a payout that settled, and Stripe fees that can be recorded as an expense rather than a line item depending on your fee settings and holding account. None of those begins with a purchase commitment, so none of them could resolve against an open purchase order.

The practical version is short. If you run purchase orders, they are entirely yours to raise, receive and close. A Stripe sync running alongside them will not touch them, will not close them, and will not create a bill that consumes one.

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Frequently asked questions

What is a purchase order in QuickBooks Online?

It is a record of what you have committed to buy from a vendor. Intuit describes purchase orders as telling vendors you intend to buy specific products in specific quantities. It holds the vendor, the items and the quantities, and it changes no account balance until you receive the goods and add it to a bill or an expense.

Which QuickBooks Online plans include purchase orders?

Intuit states that purchase orders are only available in QuickBooks Online Plus and QuickBooks Online Advanced. Simple Start and Essentials do not have the feature, and there is no setting to enable it on those plans.

How do I turn on purchase orders in QuickBooks?

Go to Account and Settings, open the Expenses tab, find the Purchase orders section, and turn on the Use purchase orders switch. The feature is off by default even on plans that support it, so upgrading to Plus does not switch it on for you.

Does a purchase order affect my financial reports?

No. A purchase order records no expense, creates no accounts payable balance and does not reduce cash, so your profit and loss, balance sheet and cash flow statement are all unchanged by it. The accounting happens when you add the purchase order to a bill, expense or check.

How does a purchase order become a bill?

Create a bill, expense or check and select the vendor. QuickBooks shows that vendor's open purchase orders, and you select Add for the correct one. Intuit describes this as closing the original purchase order, connecting it to the bill or expense, and recording the accounting accurately.

Why is my purchase order still showing as open?

Either not all of the quantities have been added to a bill, expense or check yet, or the order was never completed. QuickBooks Online closes a purchase order automatically once all quantities are added, so a partial delivery correctly leaves it open for the remainder. An order that will never complete has to be closed by hand.

Can I reopen a closed purchase order?

Yes. Open the purchase order, and use the status dropdown next to the vendor to change Closed back to Open. The same control lets you close an order manually when a vendor is never going to deliver the rest of it.

Does Acodei create purchase orders from Stripe data?

No. Nothing in Acodei's product documentation covers QuickBooks purchase orders, and there is no documented behaviour for creating, reading or closing one. Acodei records money that has already moved through Stripe, while a purchase order records a commitment made before money moves, so the two never meet. Purchase orders stay entirely in your hands.

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