Referencing contractual agreements with Contract Purchase Orders
Contract Purchase Orders provide a structured way to capture customer funding and purchasing references used during invoicing and billing for professional services engagements. While Contracts define the commercial agreement and Work Items track delivery execution, Contract Purchase Orders represent how services are authorized and referenced for customer invoicing.
For example, a customer may sign a single services contract but require that invoices reference specific purchase order numbers such as PO-45001234 or PO-45001310. Contract Purchase Orders allow these references to be recorded and associated with delivery work in PSA.
Role of Contract Purchase Orders in PSA
In many professional services organizations, invoices cannot be issued—or cannot be paid—without a valid customer purchase order. Contract Purchase Orders enable teams to manage these requirements directly within the application without changing delivery structure or financial aggregation logic.
They help answer questions such as:
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Which customer PO number must appear on this invoice?
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Which PO funds this project, milestone, or task?
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How is customer-approved funding distributed across delivery work?
Example:
A customer issues:
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PO-45001234 for Discovery and Design
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PO-45001310 for Implementation and Deployment
Both purchase orders are linked to the same contract but are used on different invoices.
Relationship to Contracts and Delivery Work
Contract Purchase Orders provide invoicing context through associations with Contracts and Work Items.
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Multiple Contract Purchase Orders may be associated with a single Contract
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Example: One contract linked to PO-45001234, PO-45001310, and PO-45001402
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Each Contract Purchase Order is linked to a single Project, Milestone, Task, or Contract
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Example:
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PO-45001234 → Project “Discovery & Design”
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PO-45001310 → Milestone “Go-Live”
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Contract Purchase Orders appear as Related Items on Contracts, Work Items, and customer records
The Contract continues to define commercial ownership, while Purchase Orders provide the required billing reference.
Relationship to Invoicing
Contract Purchase Orders provide the billing reference required for customer invoicing, while invoice amounts continue to be driven by delivery execution and contract-level rules.
When invoices are generated, the Purchase Order supplies the PO number that must appear on the invoice, ensuring compliance with customer procurement and accounts payable requirements. The Contract defines the customer and currency, and Work Items determine what is billed.
Example
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Contract: Professional Services Agreement – Acme
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Contract Purchase Order: PO-45001234
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Project: Implementation Phase 1
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Task Actuals: $40,000
The task is completed and billed as part of the project. The project is associated with the contract and funded by PO-45001234.
Generated Invoice:
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Invoice Number: INV-10045
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Customer: Acme Corporation
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Customer PO Number: PO-45001234
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Invoice Line: Implementation Phase 1 Services
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Invoice Amount: $40,000
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Currency: USD
The invoice correctly references the Purchase Order while reflecting delivery-based billing values.
Visual Relationship (Conceptual)
Contract
│ (Customer, Currency)
│
├── Contract Purchase Order
│ PO-45001234
│
└── Project
└── Task (Actuals: $40,000)
↓
Invoice
├── Customer: Acme Corporation
├── PO Number: PO-45001234
└── Amount: $40,000
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Work Items determine invoice amounts
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Contracts provide customer and commercial context
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Purchase Orders supply the PO number required for invoicing
This separation ensures invoices meet customer requirements without impacting contract-level financial aggregation.
If you’d like, I can also:
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add a multiple invoices against the same PO example, or
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show a single invoice referencing multiple work items, or
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adapt this for fixed-fee vs T&M invoicing.
Financial Behavior and Aggregation
Contract Purchase Orders do not drive financial aggregation.
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Revenue, budget, forecast, and actuals are aggregated based on direct links between Contracts and Work Items
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Purchase Orders are excluded from financial rollup calculations
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Purchase Orders provide invoicing and funding context only
This ensures that contract-level financials remain consistent, while invoicing requirements are met.
Common Use Cases
Contract Purchase Orders are commonly used to:
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Manage multiple customer PO numbers under a single contract
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Ensure invoices reference the correct PO number
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Support customer procurement and accounts payable requirements
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Provide traceability between delivery work and billed amounts