After spending days, weeks, or even months talking to a seller on Alibaba.com, it can be thrilling to enter into an agreement for your goods to be produced. But how do you know the agreement has been reached? And how do you ensure that you are on the same page with the seller? You will likely receive a pro-forma invoice with all the pertinent information, but to ensure a higher level of legal protection and erase all ambiguity, you need to create a purchase order.

What is a purchase order?

A purchase order, often referred to as a PO, is a document that details the exact request for an order. It includes every relevant piece of information about the product, sale, and shipment process. When a buyer and seller both accept a purchase order, it acts as a legally binding contract between the two parties. However, it is important to note that the legality can depend on where and how the purchase order is placed. It is not required to create a purchase order when placing an order with a seller, but it helps ensure the process goes smoothly and as expected, with no surprises on either end.

What is the difference between a pro-forma invoice and a purchase order?

Before placing an order on Alibaba.com, you will likely send an inquiry and begin messaging with your seller. You will determine all the specifications for your product itself – from color to size to packaging – as well as determining shipping specifications. When you’ve agreed to every detail, your seller will probably then send you a document with all this information included, as well as the price. This is known as a pro-forma invoice. It is simply a quote before the sale takes place.

A purchase order is usually created after receiving a pro-forma invoice. It includes the same information – all the terms and conditions of the product, sale, and shipping – but acts as a contract. When both the buyer and the seller agree to the purchase order, the purchase contract exists.

What to include in your purchase order

A purchase order should be as detailed as possible, and include every piece of information surrounding the sale, production, and fulfillment of your goods. Here’s a list to get you started:

• Your company’s full name and contact information

• The seller’s full company information and contact information

• The full address of where you want the goods shipped

• PO number and PO date

• Product name and all product specifications

• Inspection or quality control plans

• Product quantity, unit price, and total price

• All labeling and packing specifications

• Tax information

• All terms, including currency, Incoterm, port information, and shipping dates.

Remember that your seller is not necessarily responsible for creating a purchase order. It is up to you to either draw one up for our seller to agree to, or request that your seller create a purchase order that you then agree to.