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Purchase Order basics

As a buyer or seller of goods or services, use a Purchase Order to keep track of what has been requested, how much it will cost, and when it will be delivered.

How does a Purchase Order work?

A Purchase Order serves as a transaction record between the buyer and seller of a product or service. Typically issued by the buyer, a Purchase Order often includes the name of the buyer, the type of product, the quantity of the product to be purchased, the date of anticipated delivery, the agreed-upon pricing, and the total sales amount.

What is the difference between a Purchase Order and an Invoice?

The primary difference between a Purchase Order and an Invoice is that generally speaking, one is issued by the buyer and one is issued by the seller. The seller issues an Invoice once the Purchase Order has been fulfilled. Typically, the Invoice has the Purchase Order number on it to make it easier for the buyer to verify that the service or product being invoiced matches with the specifications and prices outlined in the original order.

Why do you need a Purchase Order?

A Purchase Order can help to ensure that the buyer and seller are on the same page about the service or product being delivered. Purchase Orders can also help the buyer stay organized when it comes to accounting and tracking expenses.

What happens after a Purchase Order is issued?

Normally, after you make a Purchase Order, it should be issued to the seller of the product or service you are buying. At that time, the seller will decide whether they are able to fulfill the order at the price requested.

If you have questions about buying or selling products and services, ask a lawyer.

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Sample Purchase Order

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