Xero has purchase orders built in. You can raise a purchase order, submit it for approval, email it to the supplier as a PDF, and convert it into a bill when the supplier's invoice arrives. For a business that buys everything from the office, that is often enough. The trouble starts when orders are raised somewhere else, in a job system, a field app, a stock system or an email, and someone has to get them into Xero as well.
How purchase orders work in Xero
In Xero, a purchase order moves through a simple path:
- Draft: someone creates the order with the supplier, items, quantities and prices.
- Approval: the order is submitted and someone with permission approves it.
- Sent: the approved order is emailed to the supplier.
- Billed: when the supplier's invoice arrives, the order is copied to a bill, checked and paid.
Xero lets you set who can create, approve and delete orders, and keeps the order, the bill and the supplier's invoice together. For many small businesses this covers it.
Where it goes wrong
Purchase orders rarely live only in Xero once a business grows. Common patterns:
- Orders start in the job system. Trades and construction businesses raise orders against jobs in a job management system so materials show up in job costs. The same order is then typed into Xero, or not at all until the bill arrives.
- Orders start in the stock system. Wholesalers and manufacturers reorder from their stock or inventory system, which knows what is on hand. Xero gets the bill, but not always the order or what was actually received.
- Orders start in an email. A site supervisor emails a supplier, and the first the office hears of it is the invoice.
The result is the same: orders entered twice, bills that don't match an order, job costs that are late or wrong, and approvals that happen after the money is committed.
Decide which system owns the purchase order
Before connecting anything, decide where an order should be created:
- The job or field system, if materials need to be costed against jobs as they are ordered. Xero then receives the bill, coded to the right job or tracking category.
- The stock system, if orders are driven by stock levels and you receive goods against them. Xero receives the bill and the stock value stays in step.
- Xero itself, if purchasing is simple, mostly overheads, and nobody needs order-level detail elsewhere.
There should be one place an order is created. Everything else should read from it rather than holding its own copy.
Connecting the systems
Once you know where orders start, the connections follow:
- Orders and bills flow automatically. Orders raised in the job or stock system reach Xero as purchase orders or bills, with the same supplier, items, job or tracking codes and tax codes.
- Receipts are matched. What was ordered, what arrived and what was billed are compared, so you only pay for what you received and price differences are flagged.
- Approvals happen before the order goes out. Spending limits and approvers are set up once, so orders over a certain amount wait for sign-off.
- Failures are visible. If a bill can't be created, because a supplier or account code is missing, someone is told the same day.
Many job and stock systems already have a Xero connector that sends bills. Check what it actually moves: purchase orders or only bills, job codes or only totals, and what happens with part deliveries. Where the connector stops short, a custom integration fills the gap. For the wider picture of buying, receiving and paying, see our guide to the procure to pay process, and for approvals see approval workflows.
Frequently asked questions
Does Xero have purchase orders?
Yes. Xero lets you create purchase orders, submit them for approval, email them to suppliers and convert them into bills. Check your plan on Xero's website for the features it includes.
Can Xero match a purchase order to the supplier's invoice?
Xero converts an approved purchase order into a bill, so the bill starts from what you ordered. If you need to match orders against goods received at different times, or against stock held in another system, that matching usually happens in the stock or job system before the bill reaches Xero.
Our job system sends bills to Xero. Is that enough?
Sometimes. If the bills arrive with the right job or tracking codes and nobody re-keys orders, it may be. If orders are entered in two places, or job costs only appear when the bill arrives, the connection needs to carry the order, not just the bill.
Do we need an approval app?
Not always. Xero's own approval may be enough for a small team. Businesses with several approvers, spending limits by person or job, or approvals on the road often use a dedicated approval tool or have approvals built into the system where the order starts.
Can purchase orders come from a spreadsheet?
They can be imported, but a spreadsheet as the ordering system is usually the first thing to replace. Orders get lost, duplicated or approved after the fact.
If purchase orders are typed into more than one system in your business, book a free initial chat. We'll tell you honestly whether your existing connector can do the job or what is missing.