In foreign trade operations, the understanding and correct use of terms related to orders is essential to ensure that transactions proceed smoothly. Today we speak about purchase orders (po) and form invoices (pi)。
Purchase orders (po)
Definition: purchase orders (purchase order, known as po) are formal orders issued by the buyer to the seller to confirm details of the goods procured, including quantities, prices, delivery dates, etc. Main content commodity description: details of goods procured, including models, specifications, etc。
Quantity: specify the quantity of commodities required。
Price: unit and total prices of goods。
Date of delivery: the required date or time frame for delivery。
Payment terms: the manner and terms of payment, such as letters of credit (l/c), wire transfers (t/t)。
Other provisions: includes modes of transport, insurance, packing requirements, etc。
The basis of the contract of action: po is the basis of the contract between the buyer and the seller, ensuring that the parties agree on the terms of the transaction。
Process control: help buyers control the procurement process and track the order status。
Financial management: provides the financial services with the basis for payment and budget management。
Form invoice (pi)
Definition: form invoice (proforma invoice, known as pi) is a preliminary invoice provided by the seller to the buyer prior to the actual delivery of the goods and is used primarily for the opening of import licences or letters of credit. Main content seller information: seller's details, including name, address, contact information, etc。
Buyer information: buyer's details。
Commodity description: includes trade name, specification, quantity, unit price and total price。
Delivery terms: international trade terms such as fob, cif, etc。
Payment terms: e. G. Letters of credit, wire transfers, etc。
Duration: pi, usually from days to weeks。
Import licensing: many countries require importers to provide pi when applying for import permits。
Letters of credit were opened: the bank needed pi as a reference document for the opening of the letters of credit。
Transaction confirmation: as a preliminary document to confirm the transaction, ensure that the terms of the transaction are consistent between the seller and the buyer。
Case: a company trading with po and pi procures electronic components from foreign suppliers. First, the buyer sent the seller a po detailing the specifications, quantity, price and delivery date of the goods required. After receiving po, the seller sent pi confirming the goods and the terms of the deal. The buyer applied for an import permit and a letter of credit under pi. Finally, the seller shipped the goods in accordance with the terms on pi and requested the relevant documents under the letter of credit。
