A PA who shall remain nameless (for soon-to-be-obvious reasons) writes in:
I’m PAing for my first big production, and my coordinator just told me that since we don’t have open accounts yet, I should use POs for the stuff we order. She already had taken some time to show me some stuff that needed to be done and was really busy, so when she asked if I knew about how to use POs, I said “Of course!”
I’m the only PA in the office so far, so there’s no one else to ask. What do I do?
First, you did the right thing by saying “Yes, I can,” then asking me for advice.
But, oh man, I am not ashamed to admit that purchase orders still confuse the everloving shit out of me.
As near as I can figure out, a [glossary slug=’purchase-order’]purchase order[/glossary] is kind of like a check, except that while a check is a promise that your bank will give someone money, a PO is a promise that you will eventually send someone a check, which is a promise to give them money. A promise of a promise.
Regardless, here’s how it affects your life– a vendor will send you a quote for their product/service/rental/whatever. You then ask either the coordinator or accountant for a PO. (Oftentimes, the accounting department only lets a few blank POs out of their hands at any given time; I’m not really sure why. Accounts are hoarders like that.{{1}})
You then fill out the purchase order with the relevant information from the quote. Usually this means the address, phone number, and possibly email of the vendor, the description and quantity of the product(s), and, if it’s a rental, the dates of delivery and return.
You show this to the UPM, coordinator, or whoever in your office approves POs. Assuming it’s approved, you then call up the vendor and give them the PO number. (This is pre-printed on each purchase order.)
Now, attached the quote to the PO, and put it in a file for later use. Eventually, when you get the product, you’ll also receive the invoice. What happens next, like sides, varies slightly from office to office.
The gist is, you have to give copies of the invoice and PO to accounting and the relevant department head. Most departments do their own POs, so you probably have to only worry about POs regarding production office stuff. Every once in awhile, though, some department is deemed too irresponsible to do their own.{{2}}
Physically, POs are usually printed on carbon paper, so you’ll only have to copy the invoice. But in any case, check with the accounting department about whether they want the pink pages or yellow or whateverthefuck.{{3}}
I know a lot of coordinators who actually file each PO twice. Once, in a binders organized by the vendor name, and another in a binder organized simply by PO number. Usually the second one doesn’t include the invoice and stuff, so it’s just one sheet of paper per PO, and it can all fit in a single binder.
Oftentimes, coordinators also keep a list of all of the POs that the office has created. For older coordinators, this means a sheet of paper, with a line for each PO, that you fill in with basic stuff (vendor, cost, department, date). Younger coordinators tend to create Excel spreadsheets for this purpose.{{4}}
Another thing to look out for is if the invoice says something different than the PO/quote. What happens quite a bit is that you order, say, a lens package for the camera department. Then, the AC realizes they need a 280mm lens, not 270mm, so they call Panavision up, make the change, but don’t tell anyone in the office.
Then the invoice comes back at twice the price, and the accountant yells at the UPM that we’re overbudget, and the UPM yells at you for giving them faulty information, and you yell at your stuffed animals when you get home, because no one else will listen.
[[1]]Okay, in seriousness, it’s because POs are a legal promise, and losing one is like losing a check. You wouldn’t give someone a blank check, would you?[[1]]
[[2]]Let’s be honest: it’s usually hair and make-up.[[2]]
[[3]]Worst case, claim you’re colorblind, wad it up in a ball, and throw it at them as you run past to the kitchen.[[3]]
[[4]]This makes the most sense to me, since it means you can do a computer search for a particular vendor, PO number, date, or whatever you like.[[4]]
9 Responses
I use rubberstamp.io, no confusion, no mistakes, not even really any need to understand much and they set the whole process up for you
This is why I get annoyed that I’m getting into coordinating and I have not learned this stuff. I guess because I work with such small production companies that they usually just pay by credit card or P-Card and I just get sent a receipt or invoice.
Functionally, a purchase order acts as a conditional IOU or, more basically, an offer to contract (“I promise to pay later if you will send the stuff today”). If the vendor sends to the production the subject matter of the purchase order e.g. a lens package, the vendor’s sending acts as acceptance of the offer to pay, and creates a binding contract between the vendor and the production. Because the vendor sent the lens package on production’s promise to pay, the production is now obligated to pay.
However, a purchase order is NOT a debt instrument (such as a promissory note), but it may be evidence of debt. It is a fine distinction, but a distinction nonetheless that may be recognized by law.
A purchase order works the opposite way that most purchases occur. Typically, we are used to traditional commercial transactions – you give the vendor your money (whether by check or cash or credit), and then they give you the stuff. With a purchase order, the vendor gives you the stuff, and then you pay them (it’s like a credit card, but you’re getting goods and services instead of cash).
This is system that works on a certain amount of trust. Like eBay, you give somebody else your money trusting they’ll send you whatever you’ve ordered. Vendors are typically willing to work this way where the promisor (the production company) is reputable or, at the very least, exists as a legal entity. This way, if for some reason the production didn’t pay afterward or did not pay the full amount, the vendor would know who to go after to sue on the contract.
(I am an attorney, but the above is not legal advice. Simply a very basic explanation of what a purchase order conceptually is. I hope that it helps if there is any confusion. But if you have legal questions, please consult a licensed attorney in your state).
Thanks for the clarification!
This is a really good explanations of POs, when they were first explained to me I was confused as could be.
I work with POs all day long and this is a great explanation. As I understand it, most studios have Net 60 or net 30 accounts with vendors, so they have 60 to 30 days.. (when they approve the order via a PO and a vendor invoices them…unless they’re certain terrible cheapo (but billion dollar-making) studio-that-shall-remain-nameless that lose people’s invoices four times ‘randomly’) to pay with an actual check or whatever.
If not, it would probably be a COD arrangement (or in some cases Credit card Auth), where they’d have to present a check upon receipt of the vendor’s goods, which would be a giant pain for everyone (because things take time to get approved on larger productions, transpo (399 guys) isn’t going to be sent with checks as they can have little to no interaction with the accounting office and depending on the production it’s actually easier with a PO to figure out who wrote what. It would totally suck if those 399 guys had to wait for a signed check for every vendor, and wait and come back because the check didn’t arrive, when an APOC can just ‘drop a PO’ verbally or via email or fax, and they can confirm it on their paperwork.
On a ginormously huge show, POs may start off with the location letters for that office eg a PO from the Georgia office would be GA33401. Most shows are simple; Super Man (or whatever the code name happens to be) would be SM708. It’s also easier with POs to credit/create/amend billing for dates of usage and for things like L and D when your wonderful crew breaks stuff or in most recent cases for L and D, figure out if it’s the shipping company’s fault in getting the gear there or the crew’s fault for packing broken stuff up and claiming it was broken in shipping (which can often take several months to sort through because it becomes a ‘blame game’ for both parties). That being said, I’ve seen many a PC or APOC flip out at many a crew for including new stuff/changing the list without his/her approval. That stuff can get ugly….
Another purpose is to support accounting and keep a record of what was purchased/ordered/rented by whom, and who approved it. Because poop rolls downhill PC’s keep these handy for when angry 3 EP’s are coming down on them. Its all CYA