Getting Started with AWS Purchase Order Management
As part of the procure-to-pay process, many AWS customers use Purchase Orders (“POs”) to procure AWS services and approve invoices for payment. Customers have told us that they want to use separate POs for different types of purchases and need the ability to track their PO information to ensure that valid POs are used for their invoices.
Previously, customers needed to contact AWS support for all PO related requests. Customers were also limited to using a single PO per master (or payer) account per AWS seller of record (“SoR”) entity. With the new Purchase Order Management feature, customers can navigate to a dedicated Purchase Orders page on their AWS Billing Console to manage their PO information. The feature will allow customers to configure multiple POs, define how they are mapped to invoices, and access invoices generated against their POs. The new feature also provides customers the ability to manage PO status, track PO balance and expiration, and configure contacts to receive email notifications for PO expiration and balance depletion.
With the new PO Management capabilities, customers will be able to exercise greater control over their PO information, and leverage their procure-to-pay process more effectively with AWS.
Getting started with managing Purchase orders
To locate the Purchase orders feature, navigate to the Billing console. In the left-hand sidebar, choose the Purchase orders option.
Adding a new Purchase order
Adding a purchase order is a two-step process. Step 1, you enter PO details such as billing/shipping addresses, PO ID, effective/expiration months, and PO contacts. Step 2, you configure your PO line items to define which invoices will be associated with your PO.
On the Purchase orders page, choose Add purchase order to launch the wizard
For Purchase order ID, enter your purchase order ID.
We have included your billing address in the Bill To field only for your reference and it is not used to determine PO-invoice association. This address reflects on your invoice based on your payment methods preferences and should ideally match with your PO’s billing address.
For Ship to, enter your shipping address. You can select Copy Bill to address to copy and edit your billing address. This address is also not used to determine PO-invoice association but is included to reference your PO’s information.
For Bill from, choose the AWS billing entity (Seller of Record) that you are invoiced from. The Bill from entity is used to determine PO-invoice association such that your PO will be considered for invoices that are generated from all the selected Bill from entities. We strongly recommend using separate POs for each AWS Bill From entity since remittance details of each payment entity is different. Therefore, you should avoid selecting more than one Bill from entity unless you have a strong business need.
Next, we have included your Payment terms for your reference since your PO’s payment terms should match those with AWS. This field is only for your reference and is not used to determine PO-invoice association. It is also non-modifiable. Please contact AWS support if you notice any discrepancy here.
Similarly we have also included your preferred Payment currency. Your payment currency is not used to determine PO-invoice association, but is used for the balance tracking feature which is covered in Step 2.
Next, you need to define the period you intend to use this purchase order for, by entering the effective and expiration months. Beginning of the effective month, your purchase order will be used for invoice associations and at the end of the expiration month, your purchase order will expire and will no longer be used. By entering future-dated effective/expiration months, you have the flexibility of adding POs in advance that you intend to use in the future. For instance, if you use monthly purchase orders, you can define one PO for each month by selecting the same effective and expiration month for each purchase order. Following are a few typical configurations we have seen customers use:
- PO #M1_2021 with effective month as Jan 2021 and expiration month as Jan 2021
- PO #M2_2021 with effective month Feb 2021 and expiration month as Feb 2021
- PO #M3_2021 with effective month Mar 2021 and expiration month as Mar 2021
- PO #Q4_2021 with effective month Apr 2021 and expiration month as June 2021
- PO #2H_2021 with effective month July 2021 and expiration month as Dec 2021
- PO #2022Y with effective month Jan 2022 and expiration month as Dec 2022
We will configure this PO to cover the Q3 2020 period i.e. July to September 2020.
Finally in step 1, you can add one or more Purchase order contacts for receiving email alerts for purchase order expiration and balance depletion.
In step 2, you configure line items. Line items are used to match invoices with your purchase order. When you have multiple purchase orders configured, we will use the purchase order which has a line item that best matches the invoice being generated.
For Line item number, enter a unique identifier for the line item.
You can select from the following line item types to match your purchase order with a type of invoice:
- ALL – All charges on your AWS account
- AWS Monthly Usage – Your AWS monthly invoice charges
- AWS Subscription Purchase – Your subscription invoice charges; for example, upfront charges for Reserved Instances (RI) and AWS Support charges
- AWS Marketplace Purchase – Your AWS Marketplace invoice charges
You can choose to have a single purchase order with multiple line items (or a single ALL line item) covering various invoice types or have multiple purchase orders each with a single line item, or any combination of the two.
Next, you need to enter your line item Start and End months to designate the time period you want a line item to be available for invoice matching.
If you want to track your PO’s balance amount, choose Enable balance tracking and then enter your details. If you configure multiple line items, the sum of your line item amounts is used to calculate your total PO amount. Whenever an invoice is matched with a line item on this PO, your PO (and the corresponding line item) balance will be reduced. For this PO, we will create three line items, each corresponding to a type of invoice:
By default, your line item’s start and end months are the same as your PO’s effective and expiration months. You can be more granular with your line item level configurations to have a greater control over your invoice association and balance tracking. For instance, consider a PO (PO ID #Q4_2021) with effective month as Apr 2021 and expiration month as June 2021. If you want to track this PO’s balance and invoiced amounts on a monthly basis. You can create monthly line items such as:
- Line item #1 with start month as Apr 2021, end month as Apr 2021, and Line item Type = ALL
- Line item #2 with start month as May 2021, end month as May 2021, and Line item Type = ALL
- Line item #3 with start month as June 2021, end month as June 2021, and Line item Type = ALL
You can be even more granular and expand on the above configuration with the additional line items as:
- Line item #1.1 with start month as Jan 2021, end month as Apr 2021, and Line item Type = AWS Monthly usage
- Line item #1.2 with start month as Feb 2021, end month as May 2021, and Line item Type = AWS Subscription Purchase
- Line item #1.3 with start month as Mar 2021, end month as June 2021, and Line item Type = AWS Marketplace Purchase, and so on
After entering your line item configurations, choose Submit purchase order to add your new PO.
How are purchase orders associated with invoices?
When an invoice is generated, all POs that are added to your account are considered for association. Then, expired or suspended POs are filtered out, leaving only the active POs. Your invoice’s billing entity is matched with the “Bill from” entity of your PO, filtering out those that don’t match. For instance, consider you have two POs, one for AWS Inc. entity (PO_1) and another for AWS EMEA SARL entity (PO_2); if you purchase a reserved instance from the AWS EMEA SARL SoR, only PO_2 will be considered for invoice association.
Next, we evaluate all line item configurations of remaining purchase orders to determine the best fit for your invoice. To be matched with a line item, the invoice creation date must be within line item’s start and end month, and must match with the line item type. If multiple line items match, we use the line item with the most specific service type for invoice association. For example, if you have an RI invoice, we use the “AWS Subscription Purchase” line item instead of ALL if both line items are configured. Lastly, the line items with enough balance to cover your invoice amount are selected above any out of balance line items.
If line items belonging to multiple purchase orders exactly match all the criteria, we use the purchase order which was most recently updated to match with the invoice.
Managing your Purchase Orders
After adding your purchase order, the dashboard will show the new PO along with its details. You can see more details by selecting the purchase order ID to open the PO details page.
From the Purchase order details page, you can quickly add/edit line item details, change your PO status, delete your PO, and access invoices associated with your PO.
Here, you can see that after adding the new PO, two invoices were generated against it – one for a subscription purchase and another for a Marketplace purchase. Each invoice was associated with the corresponding PO line item, reducing the balance of the line item as well as of the overall PO. Both invoices can also be downloaded from this page.
Purchase order status management
When your purchase order is past its expiration month, we automatically update its status to Expired and it is no longer used for invoice association.
If you want to pause using an active purchase order for any reason, you can update its status to Suspended at any time by choosing Change status from your purchase order’s details page. Suspended purchase orders are not used for invoice association. You can flip the status back to Active at any time in the future to activate the PO for invoicing.
One instance where you can leverage this feature is when you want to use a specific PO for a purchase. For instance, say you want to use a special one-time PO for a large Marketplace software purchase. Before making the purchase, you can suspend your active PO(s) that may qualify for Marketplace purchases, and then add/update your one-time PO configured with an AWS Marketplace purchase (or ALL) line item. Now, since other POs are suspended, only the new PO will be used for the marketplace invoice being generated. After making the purchase, you can again activate your suspended POs and suspend/delete the one-time PO.
Purchase order Notifications
You can enable email notifications for your purchase order expiration and balance tracking by adding contacts to your purchase order. You need at least one purchase order contact added to receive notifications. Notifications are beneficial to proactively take action on your expiring, or out of balance purchase orders. You do not need to take any other action to enable notifications.
To conclude, the new Purchase Orders feature will provide you a centralized place to view and manage all your PO information on AWS. You now have the ability to use multiple purchase orders with AWS and flexibility to choose a PO configuration which makes sense for your business. You can also leverage PO expiration and balance tracking notifications to effectively control your procurement budget and ensure that you are using appropriate POs for paying your invoices.
Abhishek Nautiyal, Senior Product Manager, Cost Management