A purchase order, or PO, is an official document issued by a buyer (Trust, CCG, Health Board or other organisation) committing to pay the seller (ICST) for the sale of specific products or services to be delivered.
The advantage to the buyer is the ability to place an order without immediate payment. From the seller’s perspective, a PO is a way to offer buyers credit without risk, since the buyer is obligated to pay once the products or services have been delivered.
Each PO has a unique number associated with it that helps both buyer and seller track delivery and payment.
A PO is necessary because most Trusts & CCGs will not generate payment of an invoice without a valid reference/ PO number – due to the NHS 'No Purchase Order, No Payment' policy (No PO No Pay).
Procurement Steps Below
- Trust or CCG Buyer decides to purchase a product or service and asks supplier (ICST) for a quotation.
- Trust or CCG Buyer raise a requisition from their procurement/ purchasing department.
- The procurement/ purchasing department. issues a PO to the seller, often electronically using a purchase order template
- The seller (ICST) receives the PO and confirms that the company can provide the service/ programme requested.
- If not, the seller tells the buyer the order cannot be completed and the PO is cancelled.
- The seller (ICST) generates an invoice for the service using the PO number so that it can easily be matched & sends it to the buyer & the seller also issues a coupon to the buyer’s candidate/s to access the programme.
- The buyer (Trust / CCG - accounts payable department) pays the invoice according to the terms laid out in the PO.