Purchase orders explained for small businesses

What a purchase order does

A PO states exactly what the buyer wants, at what price and by when. Once the seller accepts, it acts as a record that both sides agreed the order. Later, the seller's invoice should match the PO.

Purchase order vs invoice

• Purchase order: sent by the buyer before the sale, to place the order.
• Invoice: sent by the seller after, to request payment.

Many companies will not pay an invoice unless it quotes a valid PO number.

What to include

• The words Purchase Order and a PO number.
• The buyer's and seller's details.
• Each item, quantity and agreed price.
• Delivery address and date.
• Payment terms, such as "30 days after invoice".
• An authorised name or signature.

If you receive a PO

Check the items and prices match your quotation, then confirm the order in writing. Put the PO number on your invoice, so the buyer's accounts team can match it and pay faster.

If you send a PO

Number your POs in order, keep a copy, and check the supplier's invoice against it before you pay. It stops overcharging and gives you a clear paper trail.

All in one place

Aurum makes purchase orders, invoices, receipts, quotations, delivery notes and credit notes with the same customer and item details, so nothing is retyped.

Questions people ask