Definition
A purchase order is a document a buyer sends to a supplier to formally request goods or services at agreed prices, quantities, and delivery dates. Once the supplier accepts it, the PO becomes a binding order. The PO number is later quoted on the supplier's invoice so the two can be matched.
Also called: PO
Purchase order in practice
Purchase orders give buyers spending control and a paper trail. Larger companies often will not pay an invoice unless it references an approved PO number, so ask for one before starting work with corporate clients.
A PO includes buyer and supplier details, a unique PO number, line items with quantities and unit prices, delivery address and date, shipping method, and payment terms.
Example
A marketing agency issues PO-2026-0031 to a printer for 5,000 brochures at $0.42 each. The printer's invoice quotes PO-2026-0031 so accounts payable can approve it quickly.
Frequently Asked Questions
Is a purchase order a contract?
Once the supplier accepts it, yes. It commits the buyer to pay for the listed items and the supplier to deliver them on the stated terms.
Do I need a PO number on my invoice?
If the client issued a PO, always include its number on the invoice. Many accounts payable teams reject invoices without a matching PO number, which delays payment.