Understanding how to use purchase order QBO functionality is one of the most practical skills a QuickBooks Online user or Certified ProAdvisor can develop. A purchase order (PO) is a formal document sent from a buyer to a vendor that authorizes the purchase of specific goods or services at an agreed price before payment is made. In QBO, purchase orders serve as a critical control mechanism that helps businesses track what they have ordered, from whom, and at what cost — all before a single dollar leaves the company account.
Understanding how to use purchase order QBO functionality is one of the most practical skills a QuickBooks Online user or Certified ProAdvisor can develop. A purchase order (PO) is a formal document sent from a buyer to a vendor that authorizes the purchase of specific goods or services at an agreed price before payment is made. In QBO, purchase orders serve as a critical control mechanism that helps businesses track what they have ordered, from whom, and at what cost — all before a single dollar leaves the company account.
Purchase orders in QuickBooks Online are available on the Plus and Advanced subscription plans. If you are on the Simple Start or Essentials plan, you will not find the PO feature in your settings, and upgrading is the only path to accessing it. For business owners managing inventory, vendor relationships, or multiple team members placing orders, the QBO purchase order workflow creates a transparent paper trail that connects directly to bills and inventory items, reducing errors and duplicate payments.
The QBO purchase order process begins in the Expenses menu and flows through a logical lifecycle: draft, sent to vendor, partially or fully received, and then closed. Each stage is visible in the purchase order list view, making it easy for accountants and bookkeepers to audit open commitments at any point during the accounting period. This visibility is especially important for accrual-basis businesses that need to understand outstanding purchase obligations that have not yet hit the books as bills.
One of the most powerful aspects of using purchase orders in QBO is the ability to link them directly to vendor bills. When goods or services arrive and a bill is received, QBO allows you to pull open POs into the bill entry screen, automatically populating line items, quantities, and costs. This two-way matching process dramatically reduces data entry time and provides automatic verification that what was billed matches what was ordered — a core internal control in any sound accounting environment.
For businesses that manage physical inventory, purchase orders in QBO integrate seamlessly with the inventory tracking feature. When a PO is created for an inventory item, QBO does not update inventory counts immediately. The inventory quantity only updates when the linked bill is saved, ensuring that your on-hand counts reflect goods actually received and verified — not just goods ordered. This distinction matters enormously for financial statement accuracy and physical inventory reconciliation.
ProAdvisors preparing for the QBO certification exam should understand that purchase orders appear in several areas of the exam, particularly within payables and expenses workflow questions. Knowing how POs interact with bills, vendor credits, and inventory is not just practical knowledge — it is tested knowledge. You can also explore how purchase orders in qbo relate to broader vendor management reporting and year-end compliance tasks that affect 1099 tracking and vendor payment records.
This guide walks through every aspect of QBO purchase orders, from enabling the feature and creating your first PO to managing partial receipts, closing orders, and understanding the reporting options available. Whether you are a small business owner trying to bring order to your procurement process or a ProAdvisor helping a client implement purchasing controls, this complete walkthrough will give you the confidence and knowledge to use QBO purchase orders effectively and accurately.
Purchase orders are only available on QBO Plus and Advanced plans. Log into your account, go to Settings, then Subscriptions and billing to verify your current plan. If you are on Simple Start or Essentials, you must upgrade before proceeding with PO setup.
Click the Gear icon in the top-right corner of QBO to open the Settings menu. Select Account and Settings, then navigate to the Expenses tab in the left panel. This is where all purchase order and vendor expense preferences are configured for your company.
In the Expenses settings, scroll to the Purchase orders section. Toggle the switch to turn on Use purchase orders. You can also set a default PO message that will appear on every new purchase order, and choose whether to display custom fields or a purchase order number prefix for easy identification.
Before creating your first PO, ensure your vendor records are complete with email addresses so POs can be sent electronically. Also verify that your products and services list includes the items you plan to order, with correct descriptions, accounts, and units of measure for accurate line-item entry on each purchase order.
QBO automatically assigns sequential PO numbers starting at 1, but you can customize the starting number in settings. A consistent numbering system (such as PO-2026-001) makes it much easier to reference purchase orders in communication with vendors and to locate specific POs when reviewing the open purchase orders report or matching bills.
Once configured, create a test purchase order using a vendor and item already in your system. Review how the PO appears, check that email delivery works, and verify that the PO number, custom fields, and default message display correctly. Delete or void the test PO before it affects your live purchasing records or vendor communications.
Creating a purchase order in QBO is a straightforward process once the feature is enabled, but getting the details right on each PO is what separates good bookkeeping from excellent financial management. To start, navigate to the Expenses menu in the left sidebar and select Purchase Orders from the submenu. If this option does not appear, return to Account and Settings to confirm the feature is enabled. Click the green New Purchase Order button in the upper right to open a blank PO form that is ready for data entry.
The vendor field is the first thing to fill in on a new purchase order. Begin typing the vendor name and QBO will auto-suggest from your existing vendor list. If the vendor does not yet exist, you can add them on the fly using the Add new option that appears in the dropdown. After selecting the vendor, QBO will pre-populate the mailing address and any payment terms already stored in that vendor record, saving time and reducing the chance of addressing errors on documents sent to suppliers.
Next, set the Ship To address. QBO gives you three options: ship to your business location, ship to a custom address, or ship to a customer location. The third option is particularly useful for businesses that drop-ship directly from a vendor to an end customer — a common scenario in wholesale, construction, and e-commerce businesses. Selecting the customer destination automatically fills in the customer's address and creates a link between the PO and that customer job or project for later job costing purposes.
The line-item section of a purchase order functions similarly to other QBO transaction forms. Each line requires an item from your products and services list, a description, a quantity, a rate, and optionally a customer or class assignment. You can add as many lines as needed — there is no practical limit within a single PO. Each line will reference the expense or inventory account tied to that product or service, which determines how the eventual bill will post to your chart of accounts when the PO is converted.
QBO also includes a memo field at the bottom of the purchase order form. Use this field to add internal notes about the order — such as expected delivery dates, special handling instructions, or reference numbers from the vendor's quote or catalog. Unlike the default PO message set in company settings, the memo field is transaction-specific and can be customized on each PO without affecting your global settings. Vendors do not always see the memo field, so treat it as an internal annotation tool for your team.
Once all line items and details are entered, you have several options for saving the purchase order. You can Save and close to record it as an open PO, Save and send to email it directly to the vendor from within QBO using the vendor's stored email address, or Save and share via link to generate a public link the vendor can view without needing a QBO login. The Print or download option allows you to generate a PDF version for faxing or attaching to a vendor portal submission outside of QBO's built-in email function.
After saving, the PO will appear in the Purchase Orders list view with a status of Open. This list is your command center for managing all outstanding purchase commitments. You can filter by vendor, date range, or status to quickly find specific orders. The list view also shows the total dollar amount of each PO, making it easy to monitor spending commitments against your budget — a visibility advantage that ad-hoc ordering via phone or email simply cannot match.
A purchase order in QBO carries an Open status from the moment it is saved until a bill is created against it or it is manually closed. During the Open phase, the PO is a non-posting transaction, meaning it does not affect your general ledger, accounts payable balance, or financial statements in any way. It represents a commitment to purchase but not an actual liability until the vendor delivers the goods or services and issues a bill.
The Open PO list is where most procurement oversight happens. Bookkeepers and business owners review this list regularly to identify orders that are overdue, orders that may need to be revised due to vendor price changes, and orders where partial shipments have arrived and need to be matched. You can edit any Open PO to update quantities, prices, or delivery instructions before a bill has been received — giving you flexibility to adjust to real-world procurement changes without losing the original purchase record.
QBO supports partial receipt of purchase orders, which is essential for businesses that receive goods in multiple shipments against a single PO. When creating a bill linked to a PO where only some items have arrived, you can reduce the quantity on any line item to reflect only what was received in that shipment. The PO will then display as partially received, and the remaining open quantities will still be available for matching against future bills or receiving transactions.
Managing partial receipts properly in QBO is critical for accurate inventory and payables tracking. If a vendor ships 60 units of a 100-unit PO in the first delivery, you bill for 60 and leave the PO open for the remaining 40. The Open Purchase Orders report will reflect the outstanding quantity and dollar amount, giving your team a clear picture of what is still expected to arrive — and what your total outstanding vendor commitment is at any point in time.
A purchase order moves to Closed status in QBO under two scenarios: all line items have been fully received and billed, or you manually close the PO because the order is no longer expected to be fulfilled. The automatic closure happens when the total billed quantity matches the total ordered quantity across all linked bills. Once closed, a PO is no longer available for linking to new bills, and its balance disappears from the Open Purchase Orders report, keeping your active commitments list clean and current.
Manual closure is just as important as automatic closure for keeping your PO list accurate. If a vendor cannot fulfill an order, discontinues an item, or if business needs change before delivery, you should manually close the PO rather than leaving it open indefinitely. An accumulation of stale open POs distorts your commitment reporting and can mislead stakeholders about the company's actual outstanding purchase obligations. A good monthly review of old open POs should be part of every client's month-end close checklist.
A critical fact that trips up many QBO users and ProAdvisor exam candidates: purchase orders do not affect your financial statements at all. They are non-posting transactions. No journal entry is created, no accounts payable balance increases, and no expense is recorded until you create a linked bill. This is why POs are safe to create, edit, and even delete without worrying about distorting your books — they live entirely outside the general ledger until converted.
Purchase order reporting in QBO is straightforward but powerful when used consistently. The primary built-in report is called Open Purchase Orders, and it can be found in the Reports menu under the Expenses and Vendors section. This report lists every purchase order that currently has an Open or Partially Received status, showing the vendor name, PO number, PO date, expected delivery date, and the total outstanding dollar amount. Running this report regularly is the single best way to understand your company's total outstanding purchase commitments at any given moment.
The Open Purchase Orders report is fully customizable in QBO. You can filter it by vendor, by date range, by specific line items, or by custom fields you have added to your PO template. You can also add columns for location or class if your business uses those tracking features, which is especially useful for multi-location businesses or those that track profitability by department or project. Exporting this report to Excel allows for further analysis, pivot table creation, or presentation to stakeholders who need purchasing data in a format outside QBO.
Beyond the dedicated PO report, purchase order data surfaces in several other QBO reports. The Transaction List by Vendor report shows all transaction types per vendor including POs, bills, and payments in a single chronological view — excellent for reviewing the complete history of your relationship with a specific supplier. The Accounts Payable Aging report, while it does not include open POs (since they do not post), becomes the natural complement to the PO report by showing what has already been billed and is now owed to vendors.
For businesses using QBO's class or location tracking features, purchase orders can be tagged at the line-item level to allocate spending commitments to specific departments, projects, or locations before a bill is ever received. This pre-allocation capability is particularly valuable for construction companies, nonprofits, and any business that needs to track budget versus commitment by department or funding source. When the PO converts to a bill, those class and location tags carry forward automatically, preserving your cost center assignments without re-entry.
QBO's budgeting tool does not natively incorporate purchase order commitments into budget-versus-actual comparisons because POs are non-posting. This is a known limitation that sometimes surprises business owners expecting their open PO totals to appear as projected expenses in their budget reports. The workaround is to run the Open Purchase Orders report alongside your budget report and manually reconcile outstanding commitments — or to use a third-party procurement app that integrates with QBO and provides full commitment accounting visibility within the general ledger framework.
Advanced reporting for purchase orders becomes available when QBO is connected to third-party apps through the QuickBooks App Store. Tools like Fathom, LivePlan, or dedicated procurement platforms like Procurify can pull QBO data and present PO analytics in dashboards that include trend analysis, vendor performance metrics, lead time tracking, and budget integration. For larger businesses or those with complex procurement needs, these integrations bridge the gap between QBO's solid foundational PO tools and the advanced purchasing analytics that enterprise-level operations require.
ProAdvisors should be comfortable explaining to clients the difference between the Open Purchase Orders report and accounts payable aging, since clients often conflate the two. The key distinction is posting status: AP aging shows amounts already owed to vendors as recognized liabilities, while the PO report shows amounts committed but not yet obligated in the books. Together, these two reports give a complete picture of total vendor payment obligations — both current and incoming — which is exactly the kind of financial awareness a well-managed business needs to plan cash flow accurately.
Preparing for the QBO Certified ProAdvisor exam requires a solid understanding of the entire payables and expenses workflow, and purchase orders are tested more frequently than many candidates expect. The exam typically presents scenario-based questions where you must identify the correct next step in a PO workflow — for example, determining whether to edit an open PO, create a new one, or close an outdated order when a vendor changes their pricing mid-order. Understanding the non-posting nature of POs and how they interact with bills is consistently among the most tested concepts in the payables section.
One high-value area for exam preparation is understanding which QBO plans support purchase orders. Candidates are regularly tested on feature availability across subscription tiers, and purchase orders are a frequently cited example of a Plus-only feature. If a question presents a scenario where a client on the Essentials plan asks how to track vendor orders, the correct answer involves upgrading the plan — not finding a workaround within the current subscription. These plan-specific questions appear in multiple sections of the ProAdvisor exam and reward candidates who have memorized the feature matrix for each subscription level.
Exam questions about purchase orders also frequently involve inventory interactions. Candidates need to understand that creating a PO for an inventory item does not immediately update the item's quantity on hand. The inventory count only changes when a bill linked to the PO is saved and the received quantity is confirmed.
Exam scenarios often describe a client who is confused about why their inventory numbers are not changing after creating POs — and the correct diagnostic step is to check whether bills have been created and saved against those open purchase orders, rather than assuming an inventory or PO configuration error.
The link between purchase orders and bills is another fertile area for ProAdvisor exam questions. Candidates should know the exact steps for linking a PO to a bill: open a new bill, select the correct vendor, and QBO will automatically prompt you to add any open POs for that vendor via the Add to Bill panel on the right side of the screen.
You can accept all PO lines, select specific lines, or modify quantities if only a partial shipment was received. Understanding this workflow in detail — including what happens to the PO status when a partial bill is created — is essential for exam success.
Custom fields on purchase orders are another topic that appears in advanced ProAdvisor exam questions. QBO Advanced subscribers can add custom fields to PO templates to capture additional data such as project reference numbers, requisition codes, or buyer names. These custom fields can be set as required or optional, and they carry forward to linked bills when the PO is converted. Candidates taking the Advanced certification track should be especially familiar with custom fields and the additional workflow automation options available in QBO Advanced that are not present in the standard Plus plan.
Class and location tracking on purchase orders is tested in the context of multi-entity or multi-department clients.
When these features are enabled, every PO line item can be tagged with a class (such as a department or project) and a location (such as a store or office). These tags persist when the PO is converted to a bill and then to a payment, creating an unbroken cost-tracking thread from the original purchase commitment all the way through to the cleared payment in the bank — exactly the kind of end-to-end audit trail that sophisticated clients and their auditors demand from a well-configured QBO setup.
Finally, candidates should understand the relationship between purchase orders and the broader vendor management ecosystem in QBO, including how PO data interacts with purchase orders in qbo and year-end vendor reporting. Vendor payments tracked through the PO-to-bill-to-payment workflow feed directly into the vendor payment totals that QBO uses to determine 1099 eligibility at year end. Keeping this complete workflow in QBO — rather than bypassing POs and entering bills directly — ensures that your vendor payment data is consistent, auditable, and ready for 1099 preparation without manual reconciliation against purchase records stored outside the system.
Mastering purchase orders in QBO at a practical level means going beyond the basics of creation and closure to understand the edge cases and best practices that separate competent bookkeepers from truly skilled QuickBooks professionals. One of the most important practical habits is reviewing the Open Purchase Orders report before the monthly close — not just to identify stale POs, but to ensure that all received goods have corresponding bills entered and that no outstanding commitments are about to create cash flow surprises for the coming period.
Vendor communication is another practical dimension of QBO purchase orders that often goes undiscussed. When you send a PO electronically from QBO, the vendor receives a professionally formatted document with your company branding, the full item list, quantities, prices, and any default message you have configured. Following up on sent POs — and updating the expected delivery date field when vendors provide a confirmed ship date — keeps your QBO records aligned with real-world procurement timelines and makes the eventual bill matching process much cleaner and faster.
For businesses with multiple staff members involved in purchasing, establishing a clear internal PO workflow is as important as the QBO configuration itself. A typical workflow assigns the authority to create POs to department managers, requires a second reviewer to approve high-value orders before they are sent to vendors, and designates a specific bookkeeper to handle bill matching when deliveries arrive. QBO does not enforce these internal controls natively, but documenting and training on the workflow ensures that the PO tool is used consistently and that its audit trail reflects real purchasing decisions rather than ad-hoc data entry.
Purchase order templates deserve attention as a practical tool for businesses that order the same items regularly. While QBO does not have a true PO template feature, you can duplicate an existing PO to create a new one with the same vendor, items, and quantities pre-populated.
This technique saves significant time for businesses with recurring supply orders and reduces the risk of item or account coding errors that can occur when starting a new PO from scratch each time. Simply search for a previous PO from the same vendor, open it, click More at the bottom, and select Copy to start a duplicate.
Managing vendor price changes in the context of open purchase orders is a nuanced practical challenge. If a vendor notifies you of a price increase after a PO has been sent but before goods are delivered, you need to decide whether to update the existing PO to reflect the new price or create a new PO and close the old one.
Updating the existing PO maintains a single transaction reference but may confuse the vendor who already received the original. Creating a new PO at the new price and noting the change in the memo field preserves both versions as a price change audit record — generally the better practice for compliance-minded businesses.
Integration with third-party inventory and procurement apps expands QBO's native purchase order capability considerably. Apps like SOS Inventory, Fishbowl, or Cin7 can be connected to QBO to provide advanced features like multi-location inventory tracking, reorder point automation, barcode scanning for receipt confirmation, and detailed vendor performance analytics. These integrations sync purchase order data bidirectionally, so POs created in the inventory app appear in QBO and bills created in QBO flow back to the inventory system — giving businesses the best of both specialized procurement tools and QBO's accounting infrastructure.
The bottom line for any business considering whether to implement QBO purchase orders is that the administrative discipline required to use them properly pays dividends in financial accuracy, vendor accountability, and audit readiness. Businesses that manage purchasing informally — through email threads, phone calls, and manually entered bills — routinely experience overpayments, duplicate orders, and inventory discrepancies that cost far more to untangle than the time it would have taken to use a PO system from the start.
For QuickBooks Online users on the Plus or Advanced plan, the PO feature is already included in the subscription — there is no additional cost to activate a tool that can materially improve financial controls starting on day one of implementation.