Xero purchase orders: create, approve, send and bill
In Xero you create a purchase order under Purchases, submit it for approval, approve it, email it to the supplier as a PDF, then copy it to a bill when the goods arrive. The order itself never posts to your ledger; only the bill does.
Can I create a bill from a Xero purchase order that is still in draft?
No. Xero only lets you create a bill from an approved purchase order. Drafts, orders awaiting approval and orders already billed cannot be turned into bills.
A purchase order sits in its own list, separate from your bills, and Xero does not include it in the general ledger. Nothing hits your accounts until you turn the order into a bill.
Create a purchase order
- In the Purchases menu, select Purchase orders.
- Click New purchase order.
- Fill in the contact (the supplier), date raised, delivery date, order number and reference. Add a row for each item with description, quantity, price and account.
- Click Save, or open the arrow next to Save and choose Submit for approval.
Saving keeps it as a draft. Submitting moves it to the Awaiting Approval tab.
Choose the account and tracking category now. Xero says the main reason is to save time when you copy the order to a bill later.
Approve and send it
To approve, go back to Purchases, Purchase orders, open the tab you need, tick one or more orders and click Approve. To submit several drafts at once, tick them on the Draft tab and click Submit for approval. Who can approve depends on user roles: Administrator, Standard, Sales and purchases and Purchases users can approve purchase orders, and Draft sales and purchases users cannot.
To send, open the order and click Email, check the message and PDF, then click Send email. From the arrow next to Approve you can choose Approve & email to do both in one step. You can also Print PDF and tick Mark as sent so the order shows as sent in the All and Approved tabs. Details are in Email or print purchase orders.
Copy it to a bill
When the goods arrive, open the approved order and click Create bill. Edit the items and quantities to match what you received, then click Create bill again. The bill lands in the Draft tab of Bills, with the purchase order number in its Reference field and a link back in its history and notes (Create bills from purchase orders).
Some limits to know:
- You cannot create a bill from an order that is draft, awaiting approval or billed, or from the All tab.
- From the Approved list you can tick up to 25 orders and create one draft bill per supplier. The orders together need fewer than 100 line items. Orders with different tax rates or currencies split into separate bills.
Mark it as billed
Sometimes the supplier's invoice reaches you another way and you do not want Xero to make a second bill. On the Approved tab, tick the orders, click Mark as billed and confirm. Xero warns that this closes the order but does not create a bill by default, and it does not update tracked inventory (Mark or unmark a purchase order as billed). If you did it by mistake, open the order on the Billed tab, use the menu to Unmark as billed, and save. Xero resets the billed quantities to zero and keeps any bills you already created.
What Xero purchase orders do not do
Plan availability. Xero's UK plan page says the Simple plan lets you create draft purchase orders and bills but not approve them, so you need to upgrade to finalise them. The page does not list purchase orders for each of the other plans, so check yours in Xero rather than assuming (Xero pricing plans).
Partial deliveries. Say you order 10 chairs at £120 each, £1,200 in total, and 6 arrive. Create a bill from the approved order, change the quantity to 6 and bill £720. The order now shows as part billed. Create a second bill when the other 4 turn up. If they never will, open the order on the Approved tab, use the arrow next to Create bill and choose Close short. The status changes to billed, and history shows it was closed short. You can reopen it later if the chairs do arrive (Close a purchase order short). The figures are an illustration only.
No native goods received note. The core purchase order articles describe no separate receipt document. The only record of what arrived is the quantity you type into the bill. Xero Inventory Plus is a different product with a Receive tab, described in Receive a purchase order in Xero Inventory Plus.
No automatic matching. Xero will show the percentage billed against the order, but it does not compare the supplier's invoice to the order and a receipt for you. That comparison is three-way matching, and in Xero it is a manual check you do when you edit the bill.
Where Datamolino fits
Purchase orders cover the buying side. The supplier invoice still has to be captured, coded and entered. Datamolino captures the invoice and exports it to Xero as a bill, with the original document attached and the status you choose. If you raise purchase orders in Xero, decide whether each bill comes from the order or from the export, and mark the order as billed when it comes from the export, so it is not billed twice. Datamolino captures the PO number printed on the supplier invoice as its own field, which helps you find the matching order in Xero. For how Xero's own bill statuses work, see Xero bill statuses.
Does Xero have a goods received note?
The purchase order articles on Xero Central describe no receiving step. In the standard purchase order flow you record what arrived by editing the quantities when you create the bill. Xero Inventory Plus, a separate product, has a Receive tab on its purchase orders.
