Purchase order
A Purchase Order (PO) is the formal document sent to a vendor to buy goods or services at agreed terms, the central document of MM procurement. Created with transaction ME21N, it drives receipt, invoicing and payment.
The PO is the anchor of the three-way match: goods receipt is posted against it (updating stock and GR/IR), and invoice verification matches the vendor invoice to the PO and receipt before payment.
- A PO specifies the vendor, materials/services, quantities, prices, delivery dates, and the plant/storage location or account…
- PO types (standard, subcontracting, consignment, service).
- Pricing conditions: net price, discounts, taxes, freight.
- Watch out: Wrong account assignment (stock vs consumption).
What a PO contains
A PO specifies the vendor, materials/services, quantities, prices, delivery dates, and the plant/storage location or account assignment. It is a legal commitment to purchase and the reference against which goods receipt and invoice verification are matched.
Key aspects
- PO types (standard, subcontracting, consignment, service).
- Pricing conditions: net price, discounts, taxes, freight.
- Account assignment: stock vs consumption.
- Release strategy: approval before it is issued.
The PO in procure-to-pay
The PO is the anchor of the three-way match: goods receipt is posted against it (updating stock and GR/IR), and invoice verification matches the vendor invoice to the PO and receipt before payment. Correct PO data (price, quantity, account assignment) is what makes the downstream postings correct.
Common pitfalls
- Wrong account assignment (stock vs consumption).
- PO price/quantity errors breaking the match.
- Unreleased POs stuck awaiting approval.