Contracts are often used when the terms are detailed and specific to the work to be performed. It is commonly used for complex projects and can allow for changes as the project progresses. Contracts can cover longer durations, often extending for months or even years. In contrast, Purchase Orders are typically used for shorter-term needs (usually less than a year) and are often for one-time purchases. Additionally, your financial system may treat contracts and purchase orders differently in terms of how they are processed and tracked.
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, under Column I, within the budget.
- Can have an invoice created against them.
- 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.