Is Your Purchase Order Number System Working for You?

When something’s urgent, rules get broken 

“The stone crusher is out of diesel!” 

“Well contact Tommy down the road and get him to deliver right away.” 

“We can’t.  Remember we now have a national purchasing agreement for diesel.” 

When’s the next delivery?” 


Thursday!!! We need it now.  If the crusher is not up and running within the hour, we won’t have enough crushed stone for the major road job we are supplying.  If we don’t deliver, we could lose the customer.  I’m sure Tommy will get here within the hour if I ring him now.” 

“But what about the purchase order number?” 

“I’ll just use my name.  We can sort it out later.” 

This is a real scenario I witnessed with a client in the concrete industry, but if you swap out diesel, stone crusher, and the nature of the customer job for terms used in your organization, how often does this happen to you? For example, replace toner for diesel, printer for stone crusher, and swap tender documentation or a legal contract for major road job…you get the idea. 

What purchasing rules have been broken here? 

  1. Ordering from an unapproved supplier. 
  1. Using a person’s name as the purchase order number. 

What are the impacts of breaking the rules on Accounts Payable? 

  1. A supplier account may have to be created for ‘Tommy’ in the example above.  Or a dormant account may have to be reactivated. 
  1. If ap automation software is used, matching against a purchase order will fail because the supplier invoice won’t contain a valid PO number.  Even if accounts payable automation software is not used, someone in accounts payable is going to have to contact the person whose name is in the PO number field to get the invoice approved. 
  1. The breakdown in process can lead to delays in paying the supplier, which can result in penalties or a failure to supply for the next emergency. 

Let’s explore some ways to reduce issues with purchase order numbers? 

Configure IT Systems Correctly 

It might come as a surprise that I have listed this as the first item to address, but tweaks to your own IT Systems can improve the likelihood receiving correct purchase orders from suppliers. 

1. Make PO numbers easy to read 

Credit card numbers are 16 digits long but are divided into 4 blocks of 4 numbers to make them easier for people to read. Mistakes can still be made, but this makes it easier to read and transcribe numbers. 

Consider adopting this approach if your purchase order number is more than 5 digits long. It will probably require a minor adjustment to your purchase order software to output in an easily readable format. 

2. Don’t make purchase order numbers too long 

There are a couple of reasons for this: 

  • As mentioned above, longer numbers are harder to read and process for your suppliers. 
  • You can’t control the length of purchase order number allowed on the systems used by your suppliers. 

3. Don’t recycle purchase order numbers 

I have seen purchase order numbers reused and reissued to suppliers within 18 months. Given that most countries have legal requirements to retain invoices for 7 to 10 years, it is unwise to reuse the same purchase order numbers within this timeframe as it can cause matching errors. 

4. Reject invoices without PO numbers 

This is a bold step, and one that most organizations are reluctant to take, but automatically rejecting invoices without purchase orders forces suppliers to ensure that they are included on every invoice.  The reluctance is often due to a concern that the correct purchase order number wasn’t issued in the first place. 

Staff Guidance 

People responsible for placing orders with suppliers have a vital role to play in maximizing the number of correct purchase order numbers received.  They must be trained to follow procedures and managed to ensure compliance with them. 

  1. Ensure that a valid purchase order number is included on every purchase order. 
  1. Where possible, issue the purchase order electronically, whether by email or another approved electronic means.  (This allows the supplier to import or copy and paste the PO number into their system.) 
  1. If an order has to be placed by phone, ensure that there is a follow up email confirming the order and including the purchase order number. 
  1. Train them how to handle changes to order requirements. 
  1. If they are not permanently desk-based, provide them with an app to allow them to create, approve, and issue POs from their phone. 


Communicate with suppliers to explain what is needed to ensure their invoices are processed as smoothly as possible.  This should include: 

  1. A valid PO number is mandatory on every invoice. 
  1. There should only ever be 1 PO number per invoice.  There can be multiple invoices for a single PO, but there should only ever be 1 PO per invoice. 
  1. Not adding anything before or after the PO number such as ‘PO’, ‘PO#’, a person’s name, or date or any other text. 

The consequences for them of non-compliance can be delays in processing payments. 


Whatever AP Automation Software you use, it will work better if correct and valid purchase order numbers are included on the invoices you receive from suppliers.  Automated Invoice Data Extraction, or AIDE, can extract data from PDF invoices with 100% accuracy, so it’s vital that PO numbers are correct to enable Supplier Invoice Automation to work effectively.  The three takeaways from this are: 

  1. Configure your IT systems correctly. 
  1. Train staff on the importance of issuing valid purchase order numbers and monitor compliance. 
  1. Communicate your requirements to suppliers. 

Curious to learn more? Download our Whitepaper: Supplier Invoice Automation: Streamlining Processes, Reducing Errors, Maximizing Efficiency.

Finbarr McCarthy