How does the purchase order workflow work in Xero?

In Xero, you create a purchase order under Purchases, then Purchase orders, and either save it as a draft or submit it for approval. Once approved, you email or print it for the supplier. When goods and the supplier's bill arrive, you copy the order into a bill; approving that bill is what updates tracked inventory.

What are the purchase order statuses in Xero?

The Purchase orders page groups orders into tabs by status. Xero's help refers to four:

Xero's user roles control who can create, approve, email and delete purchase orders, so set roles before you rely on the approval step.

How do you create a purchase order?

1. In the Purchases menu, select Purchase orders, then New purchase order.
2. Enter the supplier in the Contact field, then the delivery date and delivery details.
3. Add a line for each item, choosing your inventory items so the order uses their item codes, and enter the quantity and price.
4. Save it as a draft, submit it for approval, or, if your role allows, approve it straight away.

You can also copy a previous order to start a new one, which saves time for suppliers you order from every week.

How do you send an approved order to the supplier?

Xero lets you email or print PDF copies of approved purchase orders. Open the order and email it from Xero, or print it and send it yourself. When you print, you can tick Mark as sent so the list shows which orders have gone out.

Xero's purchase order page says it shows which orders have been sent, filled and billed, and which are still open, in one place.

How do you bill a purchase order when the goods arrive?

Copy the approved order into a bill. You cannot create a bill from an order that is in Draft, Awaiting Approval or Billed.

1. In Purchases, select Purchase orders and open the approved order.
2. Create a bill from it, and adjust the quantities to match what actually arrived.
3. Check the bill against the supplier's invoice and approve the bill.

For a partial delivery, Xero says to bill what you received; the order stays open for the rest. Once every quantity is billed and the bill is approved, Xero moves the order to Billed.

When does tracked inventory go up?

In core Xero, a purchase order on its own does not change stock. A tracked item's quantity, average cost and total value update from the approved purchase transaction, which for most businesses is the bill.

Xero Central warns that marking a purchase order as billed will not update your tracked inventory record. Mark as billed (from the Approved tab) only closes the order and does not create a bill. Use it to tidy up orders you billed some other way, not as a receiving step. If you mark one by mistake, open it from the Billed tab and choose Unmark as billed; it goes back to Approved and its billed quantities reset to zero.

Xero Inventory Plus, the US-only add-on, adds its own receiving step: you receive each line of an issued purchase order as goods arrive, and only what arrived.

What should you watch out for?

• Stock looks low between delivery and bill. Until the bill is approved, received goods are not in quantity on hand. Enter bills promptly.
• Open orders are easy to forget. Before reordering, check the Approved tab so you do not order the same goods twice.
• No reorder suggestions. Core Xero does not suggest what to put on a purchase order. See our Xero reorder points guide.

Can something build the purchase order for you?

ReorderOwl works out what to reorder from your Xero exports and, when you ask, builds the purchase order with the items and quantities. It works in ChatGPT today, and Claude setup is coming shortly. It does not write to Xero, so you enter the order there yourself, and nothing is sent to your supplier. See ReorderOwl for Xero.

Frequently asked questions

Where are purchase orders in Xero?

In the Purchases menu, select Purchase orders. Orders are grouped into tabs such as Draft, Awaiting Approval, Approved and Billed.

Does a purchase order update stock in Xero?

No. Tracked inventory updates from the approved bill. Marking a purchase order as billed does not update the tracked inventory record either.

Can I bill part of a purchase order in Xero?

Yes. Bill what you received, and the purchase order stays open for the remaining quantities.

What does Mark as billed do?

It closes an approved purchase order and moves it to Billed. It does not create a bill by default.

Who can approve purchase orders in Xero?

Users whose role allows it. Users with the draft sales and purchases role can create purchase orders but not approve them.

Sources

1. Create a purchase order, Xero Central, accessed 2026-10-01
2. Email or print purchase orders, Xero Central, accessed 2026-10-01
3. Create bills from purchase orders, Xero Central, accessed 2026-10-01
4. Mark or unmark a purchase order as billed, Xero Central, accessed 2026-10-01
5. The sales and purchases user roles explained, Xero Central, accessed 2026-10-01
6. Purchase order software, Xero, accessed 2026-10-01
7. Receive a purchase order in Xero Inventory Plus, Xero Central, accessed 2026-10-01