What Is a Release Against a PO?

You have won a bid for a contract with a big corporation or government organization, and you are eager to start delivering your products and getting paid. Organizations use purchase orders as a way to authorize the purchase and payment of goods and service, and the purchase order number is necessary for a vendor to get paid on an invoice. A release against a purchase order is the actual document that authorizes you to make a delivery and bill your customer for the cost.

Companies -- including government agencies and educational organizations -- often use a purchase order system to authorize both the purchases of and payment for goods and services. A regular or standard purchase order is issued for a onetime purchase; it lists what is to be bought and, usually, the cost. The vendor includes the PO number on the invoice to show the transaction was authorized. A blanket purchase order provides for the ongoing purchase of goods from a vendor. For example, if you won a two-year contract to deliver your goods to a customer, the customer would issue a blanket purchase order rather than a separate PO for each delivery you make.

Just because you have a blanket purchase order does not mean you can start sending your products to the customer whenever you are ready. A blanket purchase order requires a release against that PO to authorize a purchase. The release is final authorization for you to make a delivery of the products for which a blanket PO has been issued. The release indicates how much product will be delivered and a requested delivery date. You get a separate release each time the customer wants more of your product authorized for purchase under the blanket PO.

When you submit your invoice to get paid for a specific release against a blanket PO, include the release information as well as the blanket PO number. It may help to think of a release as a mini PO inside of the larger blanket PO. The first time you prepare an invoice on a PO release, make sure you know where the invoice needs to be mailed or delivered and if any additional information is required, such as a delivery receipt with signature.

A blanket purchase order often includes a total dollar amount authorization. Once that amount has been spent, the PO is no longer valid, even if you get another release. Make sure you know the total purchase order authorization amount and the totals of the orders you have filled under the PO. If you get a PO release and know there is not enough money remaining to cover the purchase, get in touch with your contact at the buyer organization and verify whether you should make the delivery and will get paid.