Without purchase orders, payments happen on trust. There is no approved record of what was ordered, at what price, or by whom. Zoho Books accounting features includes a full purchase order module that connects to vendor bills, inventory receipts, and accounting entries automatically.

Last updated: July 12, 2026

Quick answer: Zoho Books handles purchase orders end to end: create a PO with GST-aware line items, route it through configurable approval thresholds, send it to the vendor, and convert it to a vendor bill on delivery with three-way matching against the goods receipt. Partial deliveries stay open until fully billed, and receiving goods against a PO automatically updates inventory and creates a complete audit trail.

Creating a purchase order in Zoho Books

Why Purchase Orders Matter for Indian SMBs

A PO system fixes disputes about quantities, rates, and delivery terms by creating an approved document before the commitment is made. For GST-registered businesses, a proper PO trail also supports input tax credit claims by documenting the commercial basis of each purchase.

For related guidance, see our TDS management in Zoho Books.

Creating and Sending Purchase Orders in Zoho Books

A purchase order in Zoho Books is a formal document sent to a vendor that authorises the purchase of specific goods or services at agreed prices. Creating a PO before placing an order gives you an approval trail and makes vendor bill matching much simpler at month-end.

Go to Purchases > Purchase Orders > + New. Select the vendor, add line items with HSN codes, quantities, rates, and the applicable GST. Key fields: PO number (auto-generated), expected delivery date, delivery address, and terms and conditions. If the vendor is registered under GST, Zoho Books auto-fills their GSTIN from the vendor record. For inter-state purchases, IGST applies; for intra-state purchases, CGST and SGST apply at the split rate. Once confirmed, email the PO directly to the vendor from Zoho Books or download a PDF copy.

PO Approval Workflows

Set up approval rules based on PO value: auto-approve under Rs. 25,000, department head for Rs. 25,000 to Rs. 2 lakh, CFO for above Rs. 2 lakh. Approvers receive email notifications and can approve from mobile.

Receiving goods against a purchase order

Converting POs to Vendor Bills

When goods arrive, convert the PO to a vendor bill in one click. All line items carry over. For partial deliveries, record a partial bill and the remaining quantity stays open.

Three-Way Matching: PO, GRN, and Vendor Bill

Three-way matching is a control that ensures you only pay for goods and services you actually received, at the price you agreed to. In Zoho Books, the three documents are the purchase order, the goods receipt note (recorded as a bill against the PO), and the vendor invoice (either uploaded by the vendor through the portal or entered manually).

When a vendor bill is created against an open PO in Zoho Books, the system shows a split view: the PO quantity and unit rate on one side, the billed quantity and rate on the other. Discrepancies are highlighted. Your accounts team can approve exact matches immediately and flag differences for review. This prevents overbilling and short-supply situations from passing through unnoticed.

Tracking PO Status

PO status shows as Draft, Sent, Partially Billed, Billed, or Cancelled. Filter by status to see open purchase orders representing committed but unfulfilled spend.

Linking POs to Inventory

Receiving goods against a PO automatically updates stock levels in Zoho Books or Zoho Inventory management. The inventory receipt is linked to the PO, creating a complete audit trail.

Indian-Specific Considerations: TDS on Vendor Payments

Many vendor payments in India are subject to TDS (Tax Deducted at Source). For contractors, the TDS rate is 1% for individuals and 2% for companies on payments above Rs 30,000 per transaction or Rs 1,00,000 per year. For professional services, the rate is 10% on payments above Rs 30,000 per year.

Regulatory update: From April 1, 2026, the Income-tax Act, 2025 replaced the old TDS section numbers (194C for contractors, 194J for professional services, and others) with a consolidated Section 393 structure identified by payment codes. The rates above carry over unchanged, but confirm your vendor tax-detail records and Zoho Books TDS return exports reference the current codes, since the CPC has been rejecting filings under the old section numbers since Q1 FY 2026-27.

In Zoho Books, enable TDS on a vendor-by-vendor basis. Open the vendor record, go to the Tax Details section, and set the applicable TDS category and rate. When you create a bill for that vendor, Zoho Books calculates the TDS amount and shows you the net payment due. On payment, Zoho Books records the TDS deducted and generates the quarterly TDS return data for Form 26Q filing.

Frequently Asked Questions

Can I send purchase orders to vendors from Zoho Books?
Yes. Click Send from the PO record and Zoho Books emails the PO as a PDF. You can also share a link for the vendor to view and accept.
Does Zoho Books support multi-currency purchase orders?
Yes. Select the vendor’s currency when creating the PO and Zoho Books converts the amount to INR using the exchange rate you configure. The bill and payment records are kept in the foreign currency with INR equivalents shown for accounting, and any exchange gain or loss on payment is recorded automatically.
How do I handle partial deliveries against a purchase order?
Create a partial bill against the PO, adjusting quantities to match what was actually received. The PO status changes to Partially Billed and the remaining quantity stays open. When the vendor delivers the rest, create a second bill for the balance; the PO closes automatically once the total billed quantity matches the ordered quantity.
Can I set up recurring purchase orders?
No built-in recurring PO feature, but you can clone existing POs. For recurring purchases, use Zoho Inventory‘s reorder point feature to trigger POs automatically.
How do I handle advance payments to vendors in Zoho Books?
Record the advance as a vendor advance payment under Purchases > Payments Made. When the vendor delivers and you receive the bill, apply the advance against the bill. Zoho Books offsets the advance amount and shows you the net balance due. For advances subject to TDS, deduct TDS at the time of the advance payment, not at the time of the bill.
What is three-way matching in Zoho Books purchase orders?
Three-way matching compares the purchase order, the goods receipt recorded as a bill against the PO, and the vendor invoice to confirm you are paying only for what you ordered and received at the agreed price. Zoho Books shows a split view highlighting any discrepancy between the PO quantity and rate versus the billed quantity and rate, so your accounts team can approve exact matches quickly and flag differences for review.