Trends & Industry Insights

Restaurant Procurement Terms (Basics)

February 12, 2025

You order ingredients, equipment, and supplies to keep everything running smoothly in your restaurant. But when dealing with suppliers, you come across different documents like purchase orders, delivery orders, and invoices. If you’re new to the restaurant procurement process then you wouldn’t know about these basic terms and how important they are for your restaurant. These are not just papers; they help track orders, payments, and stock. Understanding them will help you avoid mistakes, reduce losses, and improve efficiency. Read more to find out the real meaning of these terms and what they mean for your restaurant. Also, keep an eye out for tips that will help you to manage all these documents easily. 

Restaurant Procurement Terms

What is a Purchase Order?

A purchase order (PO) is the first step in ordering from a supplier. It is a document you send to your supplier listing the items you need, their quantity, price, and delivery date. This ensures both you and the supplier are clear about what is being ordered. It also acts as a record in case of any disputes.

For example, if you need 50kg of chicken, 10 liters of cooking oil, and 20kg of rice, you send a purchase order to your supplier with these details. Once the supplier receives and accepts it, they start preparing your order.

What is a Delivery Order?

A delivery order (DO) is a document the supplier sends with the goods when they deliver them to your restaurant. It lists what they have sent and allows you to check if everything is correct.

For example, if your purchase order was for 50kg of chicken, but the delivery order only lists 40kg, you can immediately question the supplier. The delivery order does not include prices; it only confirms what has been delivered.

What is a Goods Received Note?

A goods received note (GRN) is a document you create after checking the items delivered. It confirms that you have received the right products in the correct quantity and condition.

If a supplier delivers damaged tomatoes or fewer bags of flour than ordered, you mention it in the GRN. This helps when discussing issues with the supplier later. The GRN is your proof of what was received.

What is a Purchase Invoice (Supplier Invoice)?

After the goods are delivered, the supplier will send a purchase invoice (also called a supplier invoice). This document lists the items delivered, their price, and the total amount you need to pay.

For example, if you ordered 50kg of chicken at RM15 per kg, the supplier invoice will show RM750 for chicken, plus the total cost of all other items. This document is important for making payments and keeping financial records.

What is a Credit Note?

A credit note is issued when there is a mistake in the supplier’s invoice or when you return goods. If the supplier charges you for 50kg of chicken but only delivers 40kg, they will issue a credit note for the extra amount they charged by mistake. If you return expired milk, they will issue a credit note for the amount you paid for it.

Restaurant Procurement Terms

Instead of refunding the money, the supplier will reduce this amount from your next payment.

The Relationship Between These Documents

Each of these documents plays a role in ensuring smooth ordering and payment processes. Here’s how they connect:

  1. The Purchase Order (PO) starts everything. You send it to the supplier to request goods.
  2. The Delivery Order (DO) follows when the supplier delivers the goods, confirming what has been sent.
  3. The Goods Received Note (GRN) is created after checking the delivery to confirm what has been received.
  4. The Supplier Invoice (Purchase Invoice) is issued by the supplier for payment based on what was delivered.
  5. The Credit Note is issued if there are mistakes or returns, adjusting the amount owed.

For example, let’s say you place a purchase order for 100kg of potatoes at RM3 per kg, expecting to pay RM300. The supplier delivers only 90kg, and the delivery order confirms this. You check and note the missing 10kg in your goods received note. The supplier invoice, however, still charges RM300 for 100kg. You contact the supplier, and they issue a credit note of RM30 for the missing 10kg. Now, your next payment to them will be RM30 less.

Why Understanding These Documents is Important

Using these documents correctly helps you avoid financial losses and improves efficiency. According to a 2023 study by the Malaysian Institute of Accountants, about 30% of financial losses in restaurants come from poor tracking of supplier orders and payments. This happens when there are mistakes in deliveries, overpayments, or missing stock that go unnoticed.

If you do not check delivery orders properly, you might pay for items you never received. If you do not issue goods received notes, it becomes hard to prove missing or damaged items. If you do not check invoices carefully, you might be overcharged. Each document helps track orders, avoid losses, and maintain good relationships with suppliers.

How to Manage These Documents Efficiently

Many restaurants still rely on manual paperwork, which can lead to errors. Using a digital system can make things easier. Modern restaurant management software can track purchase orders, delivery orders, goods received notes, and invoices automatically. This reduces errors, saves time, and ensures you always have accurate records.

For example, if you order fresh vegetables every week, a digital system can automatically generate purchase orders and match them with delivery orders and invoices. This ensures you do not overpay or miss any deliveries. According to a 2022 report by Deloitte, restaurants that use digital procurement systems reduce ordering errors by up to 40%.

Restaurant Procurement Terms
Understanding procurement terms like purchase order, delivery order, goods received note, purchase invoice, and credit note is essential for managing your supplies efficiently. These documents help track orders, ensure correct payments, and maintain smooth operations.
By carefully checking each document and considering digital solutions, you can reduce financial losses and improve the way you handle supplier orders. Keeping a close eye on these processes will help you run your restaurant more efficiently and avoid unnecessary costs.

Satvika Bardwaj