Purchase Order Creation And Approval
Standardized PO governance framework – every requisition must clear financial liability thresholds, match budget codes, and carry manager authorization before any vendor commitment is made.
This policy governs the creation, approval, and monitoring of all purchase orders (POs) issued by the organization. Every PO must be generated from an approved requisition, validated against a signed vendor contract or spot-buy approval, and authorized according to the financial delegation matrix. Unauthorized commitments expose the company to vendor liability, payment disputes, and audit findings. All POs must be closed within 30 days of receipt of goods or services; open POs older than 60 days without a status update will be escalated to the Procurement Director.
This policy applies to all departments and cost centers with purchasing authority, including operational, administrative, and capital expenditures. It covers POs for goods, services, and recurring subscriptions, regardless of value. Excluded: petty cash transactions under $200, emergency purchases requiring same-day delivery (must be reported within 24 hours), and internal recharges between departments. Vendor onboarding must be completed before a PO can be issued to a new supplier.
- Every PO must reference an approved requisition ID and a valid cost center / GL account code. No requisition = no PO.
- Vendor must be registered in the approved supplier master with current W-9 / GST/HST numbers and signed terms of service.
- Single PO over $50,000 requires VP-level approval; over $250,000 requires C-suite sign-off. Split orders to bypass thresholds are prohibited.
- All POs must be auditable: include item description, unit price, quantity, delivery date, and payment terms. Blanket POs must specify maximum liability cap.
- Requestor (Department Lead): Initiates requisition with accurate specs, budget code, and justification. Must ensure funds are available before submitting.
- Procurement Officer: Validates requisition against vendor contract, negotiates terms if not pre-established, and creates the PO in the ERP system.
- Budget Owner / Cost Center Manager: Approves requisition confirming budget availability and business need. Liable for overspend if approval is given without funds.
- Finance Controller (AP): Verifies PO encoding against invoice and receiving report. Holds approval for any payment against a PO without a valid three-way match.