Before You Start

This guide assumes you have a QuickBooks Online Advanced subscription and basic familiarity with QuickBooks Online. You’ll need administrator access.

Overview

30 min
Setup Time
Intermediate
Difficulty
On-going
Maintenance

What You’ll Learn

  • Setting up PO customization and user permissions
  • Creating and sending purchase orders
  • Receiving items against POs (partial or full)
  • Matching vendor bills to purchase orders (3-way match)
  • Tracking outstanding POs and vendor commitments

1. Preparation Steps

Before implementing, ensure your QBO Advanced company settings are ready for POs:

Required Settings

  • Enable Purchase Orders in Company Settings
  • Review custom fields for POs
  • Verify vendor details are up-to-date

Best Practices

  • Define an approval workflow (internal)
  • Train team members on the new process
  • Communicate changes to vendors

2. Understanding the PO Workflow

You have two main approaches to consider, depending on your business needs.

Method A: Standard QBO Advanced POs

This uses the native QuickBooks Online Advanced purchase order functionality.

Pros:
  • Built-in and included with QBO Advanced.
  • Simple for basic procurement needs.
  • Direct integration with vendor bills.
Cons:
  • No built-in approval workflow.
  • Manual matching of bills to POs.
  • Limited customization beyond basic fields.

Method B: Integrated Third-Party Tools

These are external apps that connect to QBO Advanced for enhanced PO management.

Expert Tip: For complex approval workflows or integrating with procurement systems, consider third-party integrations like Precoro or Procurify that link with QBO Advanced. These can automate approvals, add custom fields, and provide more robust reporting.

3. Step-by-Step: Setting Up Your PO Workflow

Here is a high-level overview of the purchase order creation in QBO.

{
  "po_number": "PO-2025-001",
  "vendor_name": "Supplier Co.",
  "ship_to_address": "Main Warehouse, 123 Business Way",
  "po_date": "2025-10-29",
  "expected_delivery_date": "2025-11-15",
  "total_amount": 500.00,
  "line_items": [
    { 
      "item_name": "Widget A", 
      "sku": "WIDA-001",
      "quantity": 100, 
      "rate": 5.00,
      "amount": 500.00
    }
  ]
}

4. Implementing the Workflow in QBO Advanced

  1. 1

    Enable Purchase Orders

    Navigate to the Gear Icon > Account and Settings > Expenses. In the “Purchase orders” section, turn on ‘Use purchase orders’.

  2. 2

    Customize POs

    Go to Gear Icon > Custom Form Styles. Create a new style or edit an existing one specifically for Purchase Orders. You can add custom fields here if needed.

  3. 3

    Create a Purchase Order

    Click the ’+ New’ button > Vendors > Purchase Order. Fill in the vendor details, select the items/services, specify quantities, and save. You can then email it to your vendor.

  4. 4

    Receive Inventory or Bills

    When items arrive or you receive a bill, create a ‘Receive Inventory’ record or enter a ‘Bill’. Crucially, link this transaction to the corresponding Purchase Order by selecting it from the drawer on the right.

Common Error: Not linking bills to POs

Always ensure vendor bills are linked to their corresponding purchase orders. This enables 3-way matching, accurate spending tracking, and prevents double counting expenses.

5. Tracking and Reconciliation

Tracking Checklist

  • Review ‘Purchase Order by Vendor’ report regularly for open POs
  • Match vendor bills to outstanding POs promptly to close them out
  • Reconcile inventory received against POs for accurate stock levels
  • Monitor budget vs. actuals for purchased items using QBO reports

Need Help?

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Implementing a robust PO system can be complex. Our team of experts can help you design and optimize your QBO Advanced workflow.

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