What Is a Purchase Order?
Purchase orders are commonly used by businesses before goods or services are supplied. They help buyers and suppliers agree on what is being purchased, the quantity required, and the expected price. Understanding purchase orders can help businesses avoid confusion and create a more organised sales process.
What is a purchase order?
A purchase order, often shortened to PO, is a document sent by a buyer to a supplier requesting goods or services.
The purchase order acts as a formal confirmation of what the buyer wishes to purchase.
What information is included on a purchase order?
Purchase orders typically contain:
- purchase order number
- buyer details
- supplier details
- item descriptions
- quantities
- agreed prices
- delivery information
- purchase date
Why businesses use purchase orders
Purchase orders help both buyers and suppliers keep accurate records.
They also help ensure everyone understands exactly what has been ordered.
What is a purchase order number?
A purchase order number is a unique reference assigned to a purchase order.
Businesses use PO numbers to track orders and match invoices to approved purchases.
Purchase order example
A company may issue a purchase order requesting:
- 10 office chairs
- delivery to a specified address
- £150 per chair
- delivery within 14 days
How purchase orders help suppliers
Purchase orders provide suppliers with written confirmation that a customer intends to purchase goods or services.
This reduces misunderstandings and provides a record of the agreement.
Purchase order vs invoice
A purchase order is issued before goods or services are supplied.
An invoice is issued afterwards to request payment.
The purchase order authorises the purchase, while the invoice requests payment for the completed transaction.
Do small businesses use purchase orders?
Many larger organisations require purchase orders, but smaller businesses may not use them regularly.
However, purchase orders can still be useful for improving organisation and record keeping.
Purchase orders and invoices working together
Many businesses include the purchase order number on the invoice.
This helps customers match the invoice to the original approved order.
Creating invoices after receiving a purchase order
Once goods or services have been supplied, businesses typically create an invoice referencing the purchase order.
InvoiceAtlas allows businesses to add purchase order references, invoice numbers, customer details, and payment terms before downloading a professional invoice PDF.
Frequently asked questions
What is a purchase order?
A purchase order is a document sent by a buyer requesting goods or services from a supplier.
What is a purchase order number?
A purchase order number is a unique reference used to identify a specific purchase order.
What is the difference between a purchase order and an invoice?
A purchase order is issued before goods or services are supplied, while an invoice is issued afterwards to request payment.
Do all businesses use purchase orders?
No. Larger organisations commonly use purchase orders, while some smaller businesses may not.
Create a professional invoice
Use InvoiceAtlas to create invoice PDFs with invoice numbers, purchase order references, and payment terms.
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