Purchase Order - Background

Background

Companies use purchase orders for several reasons:

  • Purchase orders allow buyers to clearly and explicitly communicate their intentions to sellers
  • Sellers are protected in case of a buyer's refusal to pay for goods or services
  • Purchase orders help a purchasing agent to manage incoming orders and pending orders
  • Purchase orders provide economies in that they streamline the purchasing process to a standard procedure
  • Commercial lenders or financial institutions may provide financial assistance on the basis of purchase orders. There are various trade finance facilities that almost every financial institution allows to businesspeople against purchase orders such as:
  1. Before Shipment credit facility
  2. Post Shipment credit facility
  3. Trade Finance facility
  4. Foreign Bill Purchase credit facility
  5. Bill retirement credit facility

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