How to Decline a Customer's Purchase Order

Small business owners pray for purchase orders, but sometimes problems come with those POs. Since accepting a purchase order creates a legal contract to deliver goods, sometimes the best thing to do is decline the order. How you go about declining the PO depends on whether you want to keep the customer or would rather discourage further dealings. In any case, a polite response avoids further problems and can increase customer loyalty.

A new customer might write a 90-day payment into a purchase order. If you only grant 30-day payment terms, simply send a quick note to the customer thanking her for her order and explaining that your payment terms require payment in full within 30 days. Ask for a corrected PO. This leaves the decision to cancel the order up to the customer and leaves the door open to negotiation that might retain the customer under a shorter payment schedule acceptable to you.

Sometimes you receive a PO for a product that you no longer carry or in an amount that you can't supply from your current inventory. If you no longer carry the product, explain this and suggest alternative products that you do carry. If you don't have enough inventory to fill the order, but can supply the total number of units in separate deliveries over time, indicate a proposed delivery schedule. Again, this gives your customer the option of cancelling and implies that you are a trustworthy source who won't promise something he can't deliver.

Never accept a PO that contains inconsistencies with a customer's history or that has unusual terms without first confirming it with the customer. It might be a fraudulent PO or a mistake. A quick phone call or email will reveal whether the PO is valid and give you an opportunity to negotiate any requested terms with which you disagree.

An outright decline of a PO should be avoided if there is a way to politely suggest alternative terms or negotiate details. However, when a problem customer who usually ends up costing you money sends in an order, and you want to avoid doing business with that customer, reply with a polite note attached to the PO stating that you are unable to fill the order at this time and must decline. The less said, the better, so avoid stating negatives such as poor payment history or bad customer behavior. Eventually, your difficult customer will find another vendor.