Most likely, you have heard of them. Perhaps you may have heard about the many advantages of Build Macro. But if you stop to analyze it, you undoubtedly wonder what purchase orders are and why you should use them.
What exactly is a purchase order?
A purchase order is a contract between your company and a specific trading partner that specifies the scope, price, and other parameters of the transaction. These contracts are frequently used by residential building contractors to bind business partners to agreed-upon work and/or products.
While the document itself is simple and probably has many of the same provisions as a subcontractor agreement, purchase orders have a deeper significance for your company’s operations and bottom line.
- Equilibrium cash flow
One of the most important aspects of residential building, and the one that most certainly keeps you awake at night, is cash flow — the delicate balance between income and costs. How can you ensure that you charge the customer in time to cover incoming bills and project expenses? Purchase orders listed on the project budget help to paint this image.Continue reading: Top reasons to use construction estimating software like Build Macro
- Bring to light reliable project projection
Ever complete a job without knowing your potential bottom line until the final invoice? Or are you trying to figure out a more effective technique to comprehend your project’s projected bottom line? A budget that appropriately reflects the expenditures that were initially intended, the costs that have been committed (such as those from purchase orders with trading partners), and some projections for your profit, tells a lot about how your project may turn out in the end. - Make paper trails that will protect you in court
Have you ever wondered where that one email or text thread is in those, ideally seldom, situations where a trade partner doubts a payment or you are concerned about the caliber of the work? Trying to sift through countless emails and messages to find the paper trail of a pricing negotiation or a dialogue about necessary rework can be challenging. You may save yourself this time, effort, and perhaps even money by documenting everything on a single purchase order. Having quick and simple documentation to turn to can rescue you when your company’s success, reputation, and bottom line are at stake.
Want to be sure you have support in these circumstances? Establish a procedure first. Decide right now that you will issue purchase orders for the services provided by your business partners on your projects. Define the content of these documents, including the range of the job, the deadlines, and the conditions you’ll lay down. Then go one step further and demand that your business partners sign it. Create well-formatted purchase order using ready-to-use templates within seconds using Build Macro.Read also: 7 ways construction management software aids emerging companies
- Get rid of surprise bills when they arrive
How often have you opened a bill from a business partner just to be surprised by the price? Although nothing can be predicted (surprises can occur; we’ll get to that later), wouldn’t it be wonderful to have an idea of what a potential trading partner would charge you? Use the back-and-forth bargaining about pricing and scope to get your trade to make a commitment. To ensure that you both at least begin on the same page, ask for a signature or other form of approval. You can easily tack the future bills now with the help of Build Macro accouting integrations feature. - Specify expectations of your trading partners
How long does it typically take for trade partners to arrive on the job site and start working after discussing price and scope? Weeks? Months? When you and your partner manage several other tasks and commitments, even a small amount of time might cause these particulars to be pushed to the back of your mind. The general scope of the job may have been described to the client in the contract or first proposal, but the people doing the work also need to know these specifics and much more. With the help of Build Macro cloud-based home builder software you can specify tasks quickly and share it with your team.A convenient way to document these expectations is through purchase orders. A purchase order, in the hands of a trade partner, details what precisely you anticipate on this project, what they are accountable to give, and how much you both agree it will cost. To know more regarding how to create professional purchase orders, connect with Build Macro now!