A contract is used when terms are more detailed and specific to the work to be performed. It is typically used for complex project requirements and can accommodate changes to original contract as project progresses. It can cover extended period of time extending to months and years. Purchase Orders, on the other hand, are typically used in the short term (generally less than one year) and generally on a one-time basis. Your financial system may also treat Contract and Purchase Order differently.
Below are points on how Projectmates handles Contracts and Purchase Orders.
Similarities: Both contracts and purchase orders …
- Are used to track commitment amounts.
- Are tracked in the cost tab, in column I, in the budget.
- Can have an invoice created against it.
- Can have lump sum or unit price line items.
Biggest difference:
- Contracts can have change orders, while purchase orders cannot.
Minor differences:
- Contracts require a retainage amount be entered, while purchase orders do not.
- Purchase orders can track the shipping details, while contracts cannot.