How to Master Xero Purchase Orders: A Complete Guide for Growing Ecommerce Brands

You ordered 500 units from your supplier six weeks ago. They claim they shipped 500. Your warehouse received 437. Your Xero records show 500.

Now your inventory count is wrong, your reorder timing is off, and you cannot trust your stock data. Purchase order management breaks when receiving, recording, and reconciling happen manually across disconnected systems. 

Most ecommerce brands lose visibility into what they ordered, what arrived, and what they actually owe suppliers.

This guide shows you how to set up Xero purchase orders correctly, automate receiving and reconciliation, and maintain accurate inventory data as your business scales.

How poor purchase order management bleeds profit from growing ecommerce brands

Inefficient purchase order management costs ecommerce brands time, cash, and growth opportunities.

When a single PO is missed, the impact ripples across your business: warehouse teams scramble to find stock, customer service fields complaints about delays, and finance teams chase down missing paperwork. 

The result is cash flow gaps, lost sales, and strained supplier relationships.

The four main areas impacted are:

• Finance: Slow approvals and missing documentation delay payments and disrupt cash flow
• Operations: Lost paperwork and manual tracking lead to excess or missing stock
• Inventory: Over-ordering or stockouts become common when teams cannot see what has been ordered
• Supplier relationships: Missed deliveries and late payments erode trust and flexibility

For growing brands selling across multiple channels, the challenge compounds. If inventory is not synced in real time, PO quantities quickly become guesswork.

Real-time inventory sync, enabled by tools like Webgility, keeps your PO quantities accurate, no matter how many channels you sell on.

Let us break down how digital POs in Xero solve these challenges.

Suggested read: Xero automation for ecommerce: Clean books made simple

Digital vs. manual Xero purchase orders

Manual PO workflows waste time and create costly errors. Xero’s digital POs solve both.

A purchase order is a formal document committing to buy goods or services from a supplier at an agreed price and delivery date. Unlike invoices, which request payment after delivery, POs set the terms before any transaction occurs.

Most brands still manage POs with spreadsheets or email, which were never designed for this purpose.

Table 1: Manual vs. digital Xero purchase orders comparison

Multiply those time savings across 50+ POs per month and the benefits compound. Xero’s PO features include approval workflows, real-time status tracking, and seamless accounting integration.

However, PO workflows can still break down. Here is how to avoid this.

Suggested read: Xero Tools for Small Businesses

5 costly PO mistakes that drain cash flow (and how to fix them)

Duplicate orders, approval delays, and mismatched invoices cost businesses thousands. Here is how to avoid them.

1. Duplicate ordering

Two team members place separate orders for the same SKU because they cannot see each other’s POs.

Xero fix: Centralized PO tracking and required fields prevent duplicate entries. Approval workflows ensure every order is visible and authorized.

2. Approval bottlenecks

Scenario: A $10,000 order sits in a manager’s inbox for days, delaying inventory and sales. This leads to missed sales, rush shipping fees, and frustrated suppliers

Xero fix: Automated approval routing and mobile notifications let managers approve POs instantly, keeping orders moving.

3. Invoice mismatches

Manual matching errors delay payment and create extra work without a good reason.

Xero fix: PO-to-bill matching ensures invoices align with approved orders. Discrepancies are flagged before payment, not after.

4. Missed deliveries due to poor tracking

Teams lose track of open POs, leading to missed deliveries and stockouts.

Xero fix: Real-time PO status and delivery tracking keep everyone aligned.

5. Multi-channel complexity

If Shopify and Amazon inventory are not synced, PO quantities become guesswork. Overstocking or stockouts across channels becomes the standard.

Webgility’s real-time inventory sync ensures PO quantities reflect actual stock, not outdated spreadsheets.

Ready to fix these issues? Here is how to set up your PO workflow in Xero.

Your first Xero purchase order: From setup to send in 15 minutes

You can enable and configure Xero purchase orders in minutes. Here is what to check.

Purchase orders in Xero

1. Enable POs in Xero: Go to the Business tab and select Purchase Orders
2. Configure PO templates: Add your branding, set required fields, and customize numbering
3. Add suppliers: Use clear naming conventions and set currency/tax settings for each supplier
4. Set user permissions: Assign roles for who can create, approve, and send POs

Checklist: Ready to go live?

• PO module enabled
• Templates branded and fields set
• Suppliers added with correct details
• User roles and approval limits assigned

Now, let us walk through creating and managing Xero purchase orders day to day.

Suggested read: Xero Accounting Automation: Faster Month-End Close

Creating and managing purchase orders in Xero: Step-by-step

Xero’s workflow makes daily PO management fast and reliable.

Step-by-step:

1. Create a new PO: Select supplier, add items, set delivery date
2. Set approval routing: Submit for approval based on amount or category
3. Send PO: Email as PDF or mark as sent
4. Edit drafts: Amend or cancel as needed before approval
5. Track PO status: Monitor open, approved, billed, or received POs in real time
6. Link POs to bills and inventory: Convert approved POs to bills for seamless reconciliation

To maximize accuracy and control, let us look at approvals and inventory integration.

Suggested read: A Complete Guide to Multi-channel Inventory Management

Streamlining approvals and integrating with inventory

Automated approvals and inventory sync reduce bottlenecks and mistakes.

How to optimize:

• Approval rules: Set spend limits and routing so the right people approve the right POs
• Inventory sync: POs update inventory and connect to bills for full procurement-to-payment visibility
• Real-time data: For multi-channel sellers, real-time and accurate inventory is essential to avoid over- or under-ordering

For businesses selling on Shopify, Amazon, and more, Webgility automates inventory sync so Xero purchase order triggers are always based on the latest data.

Scaling ecommerce demands more than basic POs. Here is when to automate.

Suggested read: Easy Hacks on How to Improve Inventory Turnover

When to scale your PO workflow (and how Webgility helps)

Triggers you are ready for purchase order and inventory management automation:

• Processing 100+ POs per month
• Managing multiple warehouses or locations
• Working with multiple suppliers for the same SKU
• Needing real-time inventory across all channels

What advanced teams need:

• Automated PO triggers
• Supplier analytics
• Multi-channel inventory sync

Webgility connects your sales channels, inventory system, and Xero to automate purchase order creation and tracking.

It monitors inventory levels across all channels and triggers PO creation automatically when stock hits reorder points. When shipments arrive, updates sync directly to Xero, eliminating manual data entry and reconciliation errors.

You gain real-time visibility into what you ordered, what arrived, and what you owe suppliers across multiple locations.

Wine Cellerage, a wine retailer managing inventory between its Magento store and QuickBooks Enterprise, was manually updating inventory and POs constantly. They spent at least 10 hours per week on manual data reconciliation.

After implementing Webgility for automated inventory and order management, they saved over 10 hours weekly and $400 monthly while maintaining accurate, real-time inventory data across their online and offline operations.

Book a demo and see how Webgility automates Xero purchase orders in minutes.

Frequently asked questions (FAQs)

What are the main benefits of using Xero purchase orders for ecommerce?

Xero purchase orders help automate procurement, reduce manual errors, and sync inventory with accounting. This means fewer mistakes, faster approvals, and better control over stock and spending.

Can I automate purchase order approvals in Xero?

Yes, Xero lets you set up approval rules and routing. Managers can approve POs instantly, and you can automate notifications to keep orders moving quickly.

How does Xero handle inventory updates from purchase orders?

When you mark items as received on a PO, Xero updates your inventory levels automatically. This keeps your stock accurate across all channels.

When should I consider integrating Xero with inventory management tools?

If you sell on multiple channels or process a high volume of orders, integrating Xero with tools like Webgility ensures real-time inventory sync and streamlined procurement.