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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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3–49. Use Blanket Purchase Orders

One of the most time-consuming parts of the accounts payable process is matching supplier invoices to purchase orders to ensure that all payments have been authorized. This task is a difficult one if there are a multitude of supplier purchase orders. In the typical company, there are hundreds if not thousands of open purchase orders at any time; it is standard practice to issue a separate purchase order every time an item is purchased. However, by shrinking the number of purchase orders to be matched, one can reduce the workload of the accounts payable staff.

A best practice that vastly reduces the number of purchase orders is blanket purchase orders. These are long-term purchase orders, typically extending for a one-year time period, which cover all of the expected purchases from a supplier for that entire time period. By using blanket purchase orders, the accounts payable staff can continually match to the same purchase orders for the entire year, reducing the number of purchase orders that must be kept on hand.

This best practice is a simple one to implement from the accounting perspective. There is no change in the way the accounting staff stores or matches blanket purchase orders. They will continue to staple the purchase order to the invoice and move it on for further processing. The only difference is that because the amounts on the blanket purchase orders are so large, they will hardly ever be equaled by a single supplier delivery. The ...

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