How to Create a Purchase Order in QuickBooks Online and Convert it to a Bill

A purchase order (PO) is a list of what you want to buy from a vendor. It lays out the order details, including the quantity and types of products. As well as payment terms and delivery details. Once the vendor accepts the PO it’s considered a legally binding contract.

In this blog post, you’ll learn how to create a purchase order in QuickBooks Online then convert it into a bill.

Quick Instructions:

Create a Purchase Order:

  1. Click the +New button in the upper left corner
  2. Under VENDORS select Purchase order 
  3. Fill in the Purchase Order as needed
  4. Click Save and Close

Convert Purchase Order to a Bill

  1. Click Expenses -> Vendors in the left side menu
  2. Search for the vendor
  3. Click the Purchase Order to open it
  4. Click the Copy to Bill button

Keep reading for a complete walkthrough with screenshots:

Create a Purchase Order

To create a purchase order in Quickbooks Online click the +New button in the upper left. Under the VENDORS column select Purchase order.

Creating a purchase order from the +New menu in QuickBooks Online.

Fill in the fields on the Purchase Order screen as needed:

  • Vendor: Required, select from the drop-down the vendor you’re purchasing from.
  • Email: Add an email address if you plan on emailing your PO to the vendor. Multiple email addresses can be entered if you need copies sent to other people.
  • Mailing address: The vendor’s address.
  • Ship to: Used for drop-shipping. You can select one of your customers from the drop-down and it will update the Shipping address.
  • Purchase Order date: The date you’re sending the purchase order. You should always fill this in.
  • Shipping address: Where the order will be shipped.
  • Ship via: Add a shipment method if there’s one you prefer.
  • Location: Optional.
  • Tags: Optional.

Next, you’ll add what you’re purchasing. There are two sections Category details and Item details.

Category details are your accounts in your Chart of Accounts. You pick a category, enter the description of what you’re purchasing, and the dollar amount.

Item details are the products/services that you sell. This allows you to track the purchasing of your products.

Once you’ve filled in the Purchase Order screen click Save and close.

Creating a Purchase Order in QuickBooks online

Convert a Purchase Order Into a Bill

To convert your purchase order into a bill click Expenses in the left-side menu and select Vendors.

Navigating to Vendors from the left-side menu in QuickBooks Online

Search for the vendor you created a PO.

On the vendor’s screen select the purchase order from the list of transactions.

Opening a purchase order from within a vendor in QuickBooks Online.

On the Purchase Order screen click on the Copy to Bill button next to the amount.

Copy to Bill button on a purchase order in QuickBooks Online.

This will copy everything from the purchase order into a Bill:

A bill with linked Purchase Order in QuickBooks Online.

You have the option to add items to the bill. In the screenshot above you can see blue text at the very top: 1 linked Purchase Order.

If you click that it will take you to the Purchase Order you used to create the bill. So, even if you edit the bill you’ll know what PO it’s linked to.

If you do go back to the Purchase Order the status has changed to Closed. It will also have a link to the bill under the amount.

Closed purchase order with a linked bill in QuickBooks Online.

You now know how to create a purchase order and then convert it into a bill QuickBooks Online.

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Below is a video if you prefer to watch a walkthrough.

If you have any questions about purchase orders in QuickBooks Online click the green button below to schedule a free consultation.

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This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Gentle Frog, LLC does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Gentle Frog, LLC does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.

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