Purchase order: Meaning in Film Production

Purchase order

Definition

A purchase order (PO) is a numbered document that authorizes a purchase or rental from a vendor before the money is spent. It lists the vendor, items, dates, amount, and budget account code, and is approved by the UPM or production accountant. Open POs appear on the cost report as commitments, so spending is visible before invoices are paid.

What goes on a PO

PO #: 0147                      Date: 03/04
Vendor: Westside Grip & Lighting   Dept: Electric
Description: 5-ton lighting package, weekly, shoot weeks 1-4
Dates: 03/16 - 04/10
Account: 3505  Electric equipment rental
Amount: 4 weeks x $3,850 = $15,400.00
Requested by: Gaffer     Approved: UPM     Coded: Asst. Accountant

The arithmetic is on the face of the PO: 4 x $3,850 = $15,400. If the schedule adds a week, the PO is amended, not replaced, so the history is kept.

How POs show up in the cost report

The day PO 0147 is approved, the cost report shows $15,400 as a commitment in account 3505, even though no invoice has arrived. When the first weekly invoice for $3,850 is paid, actual costs go up by $3,850 and the open PO balance goes down by $3,850, so EFC doesn't change. Without the PO, the account would look $15,400 under budget until invoices arrived, and the estimate to complete would be guesswork.

The PO log

Accounting keeps a log of every PO: number, vendor, account, amount, amount invoiced, and balance. Once a week, the assistant accountant matches invoices to POs and flags:

Invoices with no PO (someone rented without approval)
Invoices that exceed their PO (loss and damage, overtime on a rental, extra days)
POs with balances left after the gear was returned (close them so they stop counting as commitments)

That last one matters at wrap. A cost report full of stale open POs overstates the final cost.

PO habits that break the cost report

Issuing POs after the rental has already started. Coding POs to the wrong account, so one department looks over and another under. Writing "TBD" for the amount. And letting departments split one large purchase into several small ones to stay under the threshold. For small purchases, use petty cash, and for one-time payments a check request. Every PO should use the account numbers from the production's chart of accounts.

Frequently asked questions

When do you need a purchase order on a film?

For any rental or purchase above a set threshold, and for any vendor that bills on account. Productions set the threshold in their accounting procedures; below it, crew use petty cash or a check request.

Who approves purchase orders?

Usually the department head requests, the UPM or line producer approves, and the production accountant checks the account code and budget before assigning a PO number.

What's the difference between a PO and a check request?

A PO commits money in advance for goods or rentals that will be invoiced. A check request asks accounting to pay a specific amount now, such as a location deposit or a one-time fee.