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In this video, Theo from buildersdocuments.com explains how to use a simple purchase order template to manage information about contractors and suppliers for project purchases. He reflects on how, when starting out, he viewed purchase orders as unnecessary, believing that verbal confirmations were sufficient. However, he emphasizes that purchase orders serve a crucial purpose by providing both contractors and builders with a single reference document that details the specifics of their contract price. This formal documentation is important for clarity and record-keeping throughout a project.