A purchase order (PO) is a formal document sent to a supplier authorising a purchase. It specifies the items, quantities, agreed prices and delivery terms.
Purchase orders are an essential internal control for managing business spending. A PO is issued before a purchase is made, committing your business to buying specific goods or services at agreed prices. This creates a three-way matching system: the PO (what you ordered), the supplier invoice (what you were billed) and the goods receipt (what you actually received). Any discrepancies between these three documents need investigation. POs help control spending by requiring approval before purchases are made, provide a basis for checking supplier invoices for accuracy, create a paper trail for audit purposes and help with cash flow planning by identifying upcoming commitments. In Xero, purchase orders can be created and converted to bills when the supplier invoice arrives. SortBooks does not manage purchase orders, but it can show which bank payments match your supplier bills once they are recorded in Xero.
SortBooks helps with the bookkeeping behind purchase order by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing purchase order by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
Accounts payable (AP) represents the money your business owes to suppliers and vendors for goods or services received but not yet paid for. It is a current liability on your balance sheet.
An invoice is a document sent to a customer requesting payment for goods or services provided. It includes details of the transaction, payment terms and the amount due.
Internal controls are processes and procedures designed to safeguard business assets, ensure accurate financial reporting and prevent fraud or errors.
A supplier (or vendor) is a business or individual that provides goods or services to your business. Supplier transactions create accounts payable obligations.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.