Film Accounting Glossary
Purchase order
What is a purchase order?
Also called PO.
A purchase order (PO) is the production's written commitment to a vendor for a defined scope and amount, issued and approved before the goods or services are ordered.
The PO is what creates the commitment on the cost report, sets the account coding, and gives accounts payable something to match the invoice against. No PO means the cost is invisible until an invoice arrives, which is how departments accidentally overspend.
Example
A PO for $27,000 of vehicles, approved before the order is placed, creates the commitment on the cost report, fixes the account coding, and gives AP something to match the invoice against. Order without one and the cost is invisible until an invoice appears.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Raised by the department and approved by the UPM or line producer before any commitment is made to a vendor.
Common mistake
Ordering first and raising the paperwork later. Until a purchase order exists the commitment is invisible, which is how departments overspend without anyone seeing it.
Related questions
- What is a purchase order used for on a film?
- To commit to a vendor for a defined scope and amount with approval in advance, creating the commitment on the cost report and fixing the account coding.
- Who approves a purchase order?
- Usually the UPM or line producer against the budget line, with studio or financier approval required above an agreed threshold.