Source Agreement On Purchase Order

In many procurement workflows, purchases are governed by overarching agreements, such as long-term contracts, vendor terms, or blanket purchase agreements. The SME Source Agreement on Purchase Order feature enables users to associate each Purchase Order (PO) with its originating Source Agreement directly within the PO form.

When this feature is enabled:

1. A new field labeled “Source Agreement” appears on the PO form.
2. Users can select from predefined Source Agreements or contracts already created within the system.
3. The selected agreement is displayed on the PO form, the PDF printout, and optionally in portal views for supplier visibility.
4. This association allows procurement and finance teams to track compliance with negotiated terms and analyze spend against agreements.

It enhances governance, simplifies reporting, and ensures consistent procurement aligned with strategic vendor relationships.

Key Benefits

1. Establishes a clear link between POs and their contractual Source Agreements.
2. Improves compliance with negotiated terms and procurement policies.
3. Enables better reporting and spend analysis by Source Agreement.
4. Helps ensure that Purchase Orders are aligned with pre-approved vendor agreements.
5. Provides suppliers with visibility into the agreement from which the PO originates.

Example Use Case

A buyer is generating a Purchase Order for raw materials. Rather than creating a standalone PO, they select an existing Annual Supply Agreement #SA-2024-01 in the “Source Agreement” field. This linkage ensures that the PO follows agreed-upon pricing, delivery schedules, and payment terms. Later, finance can track how much has been spent under SA-2024-01 across multiple POs.

Conclusion

The SME Source Agreement on Purchase Order feature introduces critical traceability and control in procurement by linking each PO to its originating contract. It simplifies vendor management, reinforces compliance, and enhances transparency across purchasing operations.