What is a purchase order?

Modified on Fri, 17 Feb 2023 at 06:18 PM

A purchase order, a.k.a PO, is the official document b/w you and your supplier that specify the details of the business transaction. 

How does purchase order work ?

Usually, the buyer prepares a purchase order. It should include the PO number associated with that order, the shipping date, billing address, shipping address, product request, quantity, price, and any other information that is critical to complete the order.

Since you’re the buyer, you should create the PO and then send it to your supplier. Once you receive the inventory or services from the supplier, it should be logged into your system and marked as processed. Finally, if the inventory or services meet your expectations, pay the supplier to complete the purchase order process.

What is the difference b/w a PO and an invoice ?

The key difference b/w a PO and an invoice is who is creating the document. 

A buyer creates a purchase order to be fulfilled by the supplier. A supplier or seller prepares an invoice for the service, and is then paid for those services. 

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