A purchase order (PO) serves as the legal document issued by Stanford to authorize suppliers to provide goods or services and facilitates invoice payment processing.
This page covers the three stages of a purchase order (PO), which include:
- The department initiates and completes a purchase requisition in the iProcurement system (such as Amazon Business, SmartMart Catalog Suppliers and Contracts, and Non-Catalog Requests), which generates a PO
- The PO is issued to the supplier for order fulfillment and invoice processing
- The department manages certain PO transactions throughout the PO lifecycle
Certain categories of purchases require additional actions in the procurement process.
A Purchase Order (PO) typically includes the following three stages:
All purchase requisitions must be in compliance with Stanford’s purchasing policies and guidelines and begin with a discussion among stakeholders about the need for a good or service. Considerations include:
- Before purchasing new items, the department can consider exploring Stanford’s reuse resources, which supports responsible purchasing.
- Determine if the need can be met through the university’s centralized programs such as Cardinal Print for printing devices and services, UIT’s Stanford University Hardware Program for work computers and accessories, and Cardinal Temps for temporary workers.
If the good or service is not available through the above, departments can use the iProcurement System to shop for and generate a purchase requisition in one of the following methods:
- Catalog methods (Amazon Business or SmartMart Catalog Suppliers) and are preferred for goods because of the competitive shopping platform, pre-identified suppliers, and built-in features that support compliant and responsible purchasing. After items are added to a catalog shopping cart, the user checks out and an incomplete purchase requisition is added to the iProcurement Shopping Cart.
- Non-Catalog Requests. Purchasers should review the above catalog purchasing methods before initiating a new Non-Catalog Request for purchases of goods because of the benefits described above. Departments must select and set up (if applicable) a supplier or independent contractor (IC) with an active supplier record before creating and completing a non-catalog purchase requisition. Refer to the Resource: Non-Catalog Request Types for definitions and best practices when selecting a non-catalog requisition type. After the user completes the Non-Catalog Request, they add it to the iProcurement Shopping Cart and click on the view cart and checkout button.
- Purchases requiring a signature on behalf of Stanford are initiated through a procurement contract request in SmartMart Contracts. If the contract requires funding, a purchase requisition is automatically added to My Requisitions in iProcurement and the preparer completes the requisition submission.
Refer to Topic Overview: Categories of Purchases for more information on identifying the appropriate purchasing method.
Preparer completes and submits purchase requisition
The preparer accesses an incomplete purchase requisition through the edit and submit requisition page, adding required information as indicated below:
- For all requisitions, add financial information, delivery information, and any additional required approvers: After adding the project, task, award and expenditure type (PTAE) information in the billing information section, a financial approver is auto-populated in the requisition based on the PTAE and dollar amount being requested. All Stanford purchase requisitions must be approved by individuals within the school or unit with the appropriate financial authority. Financial approvers are designated and managed by the department. Users can look up financial approvers by project and task using the Financial Approval Authority Query tool and can select another approver with adequate authority and remove the pre-generated approver if appropriate.
- For non-catalog requisitions, attach documentation required to validate competitive supplier selection when:
- Federal funding source: When any portion of the purchase is $50,000 or greater.
- Any funding source: When the total purchase is $250,000 or greater.
- For requisitions associated with a procurement contract: Attach Statement of Work (SOW), proposal, and /or draft agreement. If pricing information is not found within the above listed documents please include (e.g., price per hour, total number of hours, price per deliverable, or lump sum pricing for the total amount of work
Please note: Shipping and handling charges and applicable sales tax, indicated by the supplier, should be added to the purchase requisition. Shipping charges should be marked as non-taxable. If the purchase order (PO) does not include these charges but they appear on the invoice, Accounts Payable will apply the reciprocal use tax and process the invoice without requiring departmental action.
The preparer submits the purchase requisition for financial approval after completing all of the required fields in the purchase requisition.
Approver must review and approves purchase requisition
After the requisition is submitted by the preparer, the purchase requisition moves to the review and approval stage. The financial approver(s) can then approve, or reject, or return the requisition to the preparer with requests for additional information.
Canceling a purchase requisition
The process to cancel a purchase requisition depends on the status of the requisition and whether it is an Amazon Business, SmartMart Catalog Suppliers, or non-catalog requisition. If the purchase requisition is associated with a procurement contract, the preparer must contact the Contracts team using the Communications Center to request cancellation of the contract file and the purchase requisition.
Approved non-catalog and procurement contract purchase orders (PO) are delivered to the supplier directly via email to facilitate and track invoice processing by Accounts Payable. Approved catalog purchases are electronically sent to the supplier for invoice processing. To review any aspects of the PO, users may access the Requisition and Purchase Order Query tool.
There are several activities that can occur when a PO becomes active:
| Activity | Process and Guidance |
|---|---|
| Add funds through a change order | In most cases, departments should not add funds to an active PO. A new purchase requisition should be created for any additional purchases. Change orders are not recommended for catalog purchases because they are fulfilled and completed quickly. If the corresponding invoice line amount exceeds the PO line amount by more than $250, the invoice will be placed on hold and the department will need to add just enough funds to the PO through a change order to release the hold for payment. If the PO is associated with a procurement contract, the department must follow the contract amendment process for any invoice amount increases. Please note: After adding funds, if the total amount is above a purchase threshold dependent on the funding source, preparers must include documentation to demonstrate competitive supplier selection. |
| Change a PTA using self-service functionality or through a change order | Departments may need to change a PTA because it has an end date or the original PTA is incorrect. The PTA should be changed before any invoices are submitted by the supplier. PTA changes can be made on eligible and active POs using self-service functionality that is available in the Requisition and Purchase Order Query tool. A Review Ineligibility to Change PTA button will display if the PO is ineligible to use the self-service functionality, but a change order may be applicable. If there is only one remaining invoice on the PO or the invoice is already paid, use iJournals to transfer the expense to the correct PTA. |
| Change an Expenditure Type through a change order | If the invoice is already paid, use iJournals to transfer the expense to the correct Expenditure Type Code. If the invoice is not already paid, submit a change order. |
| Manage potential issues or disputes | Refer to the Topic Overview: Managing the Supplier Relationship and Record for more information on how to manage disputes with suppliers when the delivered product or service is not meeting expectations. In some situations, schools and units can request that the Accounts Payable (AP) team place a hold on an invoice, allowing additional time to communicate with the supplier and reach a reasonable resolution. |
| Upload an Invoice (not applicable to catalog purchases) | Suppliers typically submit invoices directly to AP for payment. Departments can, at their discretion, require the supplier to submit invoices directly to the department for review and uploading. Accounts Payable processes invoices and schedules payment per the terms specified on the purchase order (e.g. net 30 days from date on the invoice). Catalog invoices are submitted electronically to Oracle by the supplier for payment and do not need to be submitted by the department. |
| Finally Close PO | POs with no invoice activity cannot be Finally Closed and must be canceled instead. If the PO has invoice activity, it is eligible to be Finally Closed when:
It is a good practice to Finally Close eligible purchase orders to reduce risk and support accurate financial reporting. When a PO is Finally Closed, all outstanding commitments are relieved. A PO can be Finally Closed in two ways:
The Finally Close action is permanent and cannot be reversed. If the Finally Close action was taken in error, a new PO must be created to replace the Finally Closed PO. |
| Cancel PO | When an active PO has no invoice activity, perhaps because the goods or services will no longer be fulfilled by the supplier or the department no longer requires them, the PO can be canceled using self-service functionality. If the PO is associated with a procurement contract, the preparer must contact the Contracts team using the Communications Center to request cancellation of both the procurement contract and PO. Before canceling a PO in Stanford’s financial systems, departments should notify the supplier. For orders that Amazon Business cannot fulfill, the PO line (or entire PO) will automatically be canceled. |
| Suppress commitments (Subawards only) | PO suppression functionality is only available for subaward POs. Refer to How To: Review and Suppress Subaward Purchase Order Commitments to learn more. |
The following tables provide the statuses that display for purchase requisitions and purchase orders in iProcurement, Requisition and Purchase Orders Query tool and Oracle Business Intelligence (OBI). The tables also include any suggested actions or guidance as appropriate.
Purchase requisition statuses
The table below provides the purchase requisition status and a description of the status with potential actions that can be taken.
| System and field name where status displays | Status description and possible actions to be taken |
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Purchase Order (PO) statuses
The first consideration for understanding the PO status is determining whether the PO is active. When a PO has been Finally Closed or Canceled it is no longer active and no further actions can be taken on the PO. If the PO is active, refer to (Stage 3) Department manages any PO transactions. Refer to the table below for details:
| System and field name where status displays | Statuses that display in the fields and description |
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If the PO has not been canceled or Finally Closed, the next consideration is the PO Authorization status, which indicates possible stages of the approval status of the PO. After the PO has been approved, it becomes active. Refer to the below table for details:
| System and field name where status displays | Statuses that display in the fields and description |
| Approved: The purchase order is approved and Stanford has issued it to the supplier. Incomplete: A status that temporarily displays to indicate that the purchase order is pending further action by central procurement (likely due to a procurement contract requiring a signature). Requires Reapproval: The user initiated a change order requisition or contract amendment and will be notified when the PO has been approved. |
After the PO is approved, the department can make PTA changes on the PO. The following statuses display related to a PTA change. Refer to the (Stage 3) Department manages any PO transactions section above to learn more about how to change a PTA and other activities that can occur on an approved PO.
| System and field name where status displays | Statuses that display in the fields and description |
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