When should a PO be used?

A PO should be used whenever the purchase is big enough that a misunderstanding would hurt: physical goods for resale or production, anything over a threshold you set (many small businesses pick $250–$500), recurring supplier orders, and any purchase where price was negotiated. If you'd be upset receiving the wrong quantity or being charged a different price — that's a PO.

Where POs are overkill: small ad-hoc expenses (office coffee, a $15 subscription). Forcing a PO on every trivial buy creates 'PO fatigue' and people start bypassing the system, which is worse than having no threshold at all.

A sane starter policy: all inventory purchases get a PO regardless of size (they need receiving checks anyway), everything else only above your threshold.