NetSuite Contract Management For Purchase Order Management

Oracle NetSuite Contract Management To Manage Purchase Orders

Managing purchase orders is a critical aspect of procurement and supply chain management. Here’s how you can develop a well-organized and efficient purchase order process using Oracle NetSuite contract management for a cost-effective and efficient flow of goods and services.


The procurement process mainly involves businesses acquiring goods or services from vendors. During this, the buyers and sellers require a competent record of the order, payment, and delivery details to navigate the transaction successfully. That’s where purchase orders come in. They facilitate an organization's ability to manage its finances, inventory, and vendor relationships.

An organization can encourage open communication with its vendors by using purchase orders. It leaves no room for misunderstandings or ambiguity. But are they legally valid? Do they serve the same purpose as invoices? Although purchase orders tend to dispel doubts, there are still many questions about their application, legitimacy, handling, and other aspects. So, here’s a detailed blog on purchase orders to chase away all your reservations about purchase orders and how Oracle NetSuite contract management is the most suitable solution.

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What is a purchase order?

A purchase order is a legally binding document between a buyer and seller summarizing the purchase, including the product or service and payment. It enables buyers to explicitly state their requirements and specifications regarding the product or service. Also, they can track purchase orders to track order details, quantities, and delivery. 

This official record protects both parties from disputes and confusion down the road. So, businesses can order products or services without paying for them in advance. When sellers agree to a purchase order, they become legally obliged to deliver the product or service as specified in the document. On the other hand, the buyer must purchase the designated good or service at the agreed-upon cost. 

What is the purpose of a purchase order?

A purchase order is a legally binding document between a buyer and a seller in a business transaction. Its primary purpose is to outline the specific details of a purchase, providing clarity and protection for both parties involved. 
It formalizes the agreement between the parties and outlines the terms and conditions of the transaction. Some of the other purposes of a purchase order include:

Specification of Goods or Services: The PO includes detailed information about the products or services being purchased, such as quantity, description, specifications, and any other relevant details. It helps to avoid misunderstandings and ensures that both parties are on the same page.

Price and Payment Terms: The purchase order specifies the agreed-upon prices for the goods or services, including any applicable taxes or fees. It also outlines the payment terms, including due dates and any discounts for early payment.

Delivery Schedule: A purchase order typically includes the expected delivery date or a schedule for the delivery of goods or the completion of services. It helps the buyer plan and ensures the seller is mindful of the timeframe expectations.

Terms and Conditions: The purchase order may include additional terms and conditions related to the transaction, such as warranties, return policies, or penalties for late delivery.

Record-Keeping: Purchase orders are an essential record for both the buyer and the seller. They provide a clear transaction trail, which can be valuable for auditing, tracking orders, and resolving disputes.

Supplier Accountability: By having a formal purchase order, the buyer can hold the supplier accountable for delivering the agreed-upon goods or services at the specified terms. During discrepancies, the purchase order is a reference point for resolution.

What are the different types of purchase orders?

Purchase orders can come in various types, each serving different purposes and scenarios. They offer flexibility and efficiency in managing diverse procurement needs. The choice of which type to use depends on the specific requirements of the purchasing organization and the nature of the goods or services. The following are the four common types of purchase orders in the procurement process, and here's a brief overview of each:

Standard Purchase Order

They are the most common type of purchase order. Standard purchase orders come in handy for one-time purchases of goods or services. Since the transaction isn’t regular for either party, these POs require more information than the other types. Therefore, standard purchase orders specify the quantity, description, price, and delivery date of the goods or services. Once the vendor accepts the terms, it becomes a legally binding agreement.

Planned Purchase Order

An organization that knows it will require products or services in the future but doesn’t have all the necessary information can benefit from using a scheduled, future, or planned purchase order. It may include a tentative delivery date and quantity, but the specifics are subject to change. A planned PO can change into a standard PO once you finalize the details.

Blanket Purchase Order

Companies use blanket purchase orders when they have a long-term agreement with a supplier to deliver goods or services over a specified period. It outlines the terms and conditions for multiple transactions without specifying individual delivery dates or quantities. They’re apt for repetitive or ongoing purchases.

Contract Purchase Order

A contract purchase order is a type of PO used for long-term agreements with suppliers, usually for a large volume of goods or services over an extended period. It outlines terms and conditions, pricing, and delivery schedules. Contract POs provide stability and security for the buyer and the supplier over the contract period.

Are invoices and purchase orders the same?

A purchase order is a formal document between the buyer and seller outlining the type, quantity, and agreed-upon prices for products or services. It serves as an official offer to purchase specified goods or services. The buyer creates the purchase order before the actual transaction takes place.

On the other hand, an invoice is a document the seller gives to the customer following the delivery or performance of goods or services. It includes details such as the quantity, prices, terms, and applicable taxes. An invoice is a payment request and serves as a transaction record. Although they are both crucial steps in the procurement process, their functions are entirely different. The purchase order sets the purchase terms, and the invoice outlines the transaction details for payment purposes.

Why is Oracle NetSuite contract management apt for purchase order management?

Purchase order management refers to creating, tracking, and managing purchase orders within a business. Organizations usually depend on Oracle NetSuite to create, manage, and expedite purchase orders. The ERP platforms provide a comprehensive overview of the vendors, suppliers, and finances to facilitate effortless purchase order management. However, the system remains aloof from the contract management procedure, which results in a void in the flow of data and the bottom line.

Organizations can overcome this shortcoming by integrating their ERP platform with Dock 365 contract management software. The connected system allows users to carry out all the essential tasks of purchase order management from either platform. There’s an easy flow of information between Oracle NetSuite and Dock regarding vendors, expenses, invoices, purchase orders, and contract details. Here’s how you can effectively manage purchase orders: 

Creating purchase orders: When a business needs to procure goods or services, it must request or create a purchase order. This document includes details such as the item description, quantity, unit price, payment terms, delivery date, and other relevant terms and conditions. Oracle NetSuite contract management allows users to create purchase orders within the Dock platform and add all PO master details and details like items, expenses, etc. The ERP platform instantly updates to reflect all of the changes. Thus, users can create multiple POs under different contracts within the Dock.

Approval process: Purchase orders often go through an approval process within the organization. It may involve obtaining approvals from different departments or individuals and ensuring the purchase aligns with budgetary constraints and organizational needs. The Dock contract management system allows users to route the approval process through pre-determined workflows for faster results.

Sending POs to Suppliers: Once approved, the purchase order to be sent to the supplier or vendor. It serves as an official request for the specified goods or services. Organizations can make purchase orders easily accessible to suppliers for clarification by using an integrated system or vendor portal.

Order tracking: Monitoring the status of purchase orders is a crucial aspect of PO management. It includes tracking the order request until the goods or services are received. Updates on the order's status, including shipment and delivery information, are essential for effective management. Oracle NetSuite contract management enables businesses to monitor the status of these tasks from either platform.

Invoice Matching: Once the goods or services are received and accepted, the accounts payable department matches the supplier's invoice with the corresponding purchase order and receipt documentation. It helps ensure accuracy in billing and prevents overpayments or discrepancies. Since both invoice and purchase order details are readily available on the Dock CMS and Oracle NetSuite platforms, users can easily compare the two.

Contract value: The Invoice section in Dock CMS shows the total value of a contract and the sum of all the invoice amounts that are added under a contract. The Dock CMS application determines and shows the remaining amount available for a contract using these two values. 

Recordkeeping: It is essential to maintain proper records of all purchase orders, receipts, invoices, and related documents. It helps in auditing, financial reporting, and historical tracking. Oracle NetSuite contract management documents all the details related to vendors and contracts.

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Implementing an efficient purchase order process with Oracle NetSuite contract management can streamline procurement, reduce errors, enhance transparency, and improve organizational efficiency. It involves creating, tracking, and managing purchase orders to ensure a smooth and transparent flow of goods and services. The key stages include creating purchase orders, obtaining necessary approvals, sending orders to suppliers, tracking order status, receiving and inspecting goods or services, matching invoices, processing payments, and maintaining comprehensive records. Automated tools and software can facilitate these processes and ensure the accurate and timely management of purchase orders.

Oracle NetSuite’s integration with contract management software enables organizations to utilize the capabilities of both platforms to facilitate purchase order management and improve procurement.

Disclaimer: The information provided on this website is not intended to be legal advice; rather, all information, content, and resources accessible through this site are for purely educational purposes. This page's content might not be up to date with legal or other information.
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