Purchase order

A purchase order is used to request goods or services from a supplier. The supplier can approve or deny the purchase order.

A purchase order is used to request goods or services from a supplier. The supplier can approve or deny the purchase order.

The purchase order includes which goods or services you’re looking to buy, as well as prices and terms and conditions. The supplier approves the purchase order if they can supply the goods and services and agree with the terms you’ve offered.

They might also want to negotiate before they approve it.

A purchase order is also called a PO

Download a free purchase order template.

Reasons to use a purchase order

The benefit of a PO is that both parties agree to the terms beforehand. This helps avoid confusion, errors, or disputes later on. 

Additionally, the purchase order can be used to get internal approval from stakeholders, and to ensure that you have good enough liquidity to make the purchase.

The PO can also be used to track purchases. A unique PO number is used on the purchase order, the delivery note, the invoice, and any other documents related to the sale.

You can also review your purchase orders to get an overview of how much money you’re spending and what you’re spending it on. This can help you set up budgets and manage your cash flow.

A person sending an invoice on their phone, using the free invoicing software Conta
A person sending an invoice on their phone, using the free invoicing software Conta

What to include on the PO

The purchase order includes a lot of the same information as an invoice, such as information about your company, the supplier’s company, and the goods and services and their prices.

 However, these are some of the things that make a purchase order different: 

  • It includes your logo rather than the supplier’s logo, which will be on the invoice
  • It has a PO number rather than an invoice number
  • It has the PO issue date
  • It doesn’t have payment terms, but can include a field for the supplier to sign if they agree to the purchase order.

Read more about purchase orders.

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