--- title: "Purchase Order Meaning: What a PO Is and How It Works" description: "A purchase order (PO) is the document a buyer sends a supplier to order goods or services at agreed prices. See what goes on one, PO vs invoice, and why PO numbers matter." url: https://www.paidnice.com/dictionary/purchase-order --- # Purchase Order ## What is a purchase order? **A purchase order (PO) is a document a buyer sends to a supplier to order goods or services, listing what it wants, the quantities, the agreed prices, the delivery date and the payment terms.** Each PO has its own number. When the supplier accepts it, the order is agreed and the supplier can deliver and invoice. Companies use purchase orders to control spending: someone approves the PO before money is committed, and accounts payable later checks the invoice against it. For the supplier, the PO number matters because many buyers will not pay an invoice that does not quote it. Key takeaways **The buyer's order.**A purchase order is sent by the buyer to say what it wants to buy, at what price. **It comes before the invoice.**PO first, then delivery, then the supplier's invoice quoting the PO number. **No PO number, no payment.**Many accounts payable teams hold or reject invoices that do not quote a valid PO. ## How the purchase order process works - The buyer raises a purchase request, and a manager approves it. - The buyer sends the supplier a purchase order with a PO number. - The supplier accepts the order, delivers the goods or does the work. - The supplier sends an invoice that quotes the PO number. - Accounts payable matches the PO, the delivery record and the invoice, then pays. That last step is the [3-way match](https://www.paidnice.com/dictionary/3-way-match). If the invoice price, quantity or PO number does not match, the invoice waits until someone fixes it. ## What goes on a purchase order What to put on a purchase order **PO number and date**A unique number the supplier will quote on the invoice. **Buyer and supplier details**Names, addresses and contacts for both sides. **Items ordered**A description, quantity and unit price for each line, with the total. **Delivery details**Where and when the goods should arrive or the work should be done. **Payment terms**For example [net 30](https://www.paidnice.com/dictionary/net-payment-terms), and the currency. You can make one with the [free purchase order generator](https://www.paidnice.com/free-purchase-order-generator), which builds a PO PDF in a couple of minutes. ## Purchase order vs invoice | | Purchase order | Invoice | | --- | --- | --- | | Sent by | The buyer | The seller | | When | Before delivery | After delivery | | Purpose | Order goods or services at agreed terms | Ask for payment | | Effect in the books | None until goods arrive (a commitment, not a liability) | Records a sale for the seller and a bill for the buyer | Under the US Uniform Commercial Code, an order for goods to be shipped promptly can be accepted by a prompt promise to ship or by shipping the goods ([UCC section 2-206](https://www.law.cornell.edu/ucc/2/2-206)). Once it is accepted, the buyer and the supplier have a contract on those terms. ## Why PO numbers delay payments For suppliers, a common reason a large customer pays late is a missing or wrong PO number on the invoice. The invoice goes into an exception queue in the buyer's accounts payable system and often nobody tells the supplier until it is overdue. Ask for the PO before you raise the invoice, and put it on the invoice in a field the buyer's system can read. Our guide to [PO numbers on invoices](https://www.paidnice.com/blog/po-number-on-invoice) covers this in more detail. Paidnice uses AI to spot when a customer needs a PO, drafts the email asking the right person for it, and adds the PO to the invoice in Xero or QuickBooks Online when it arrives. A person reviews anything that does not look right before it is used. Frequently asked questions What is a purchase order in simple terms?A purchase order is the buyer's written order to a supplier. It says what the buyer wants, how many, at what price, when, and on what payment terms. What is a PO number?A PO number is the unique reference on a purchase order. The supplier quotes it on the invoice so the buyer's accounts payable team can match the invoice to the order. Who creates a purchase order, the buyer or the seller?The buyer. The seller receives the purchase order, accepts it and later sends an invoice that quotes it. Is a purchase order legally binding?A purchase order is an offer to buy. Once the supplier accepts it, by confirming or by delivering, it generally becomes a binding contract on those terms. What is the difference between a purchase order and a sales order?A purchase order is created by the buyer to order goods. A sales order is created by the seller to confirm and fulfill that order internally. Do I need a purchase order to send an invoice?Not legally, but many larger customers will not pay an invoice without a valid PO number. Ask for it before you invoice. Keep reading Free toolPurchase order generatorBuild a purchase order PDF in a couple of minutes. Dictionary3-way matchHow AP checks a PO, a delivery and an invoice before paying. BlogPO numbers on invoicesWhy missing PO numbers stall payment, and the fix. ## Start getting paid on time with Paidnice Connect Xero or QuickBooks and Paidnice prepares draft policies for you. Nothing runs until you approve them. Try it FreeBook a Demo [Rated 5 stars, 160+ reviews](https://www.paidnice.com/reviews) ยท [App of the Year](https://www.paidnice.com/blog/winner-xero-global-app-awards-2026)