What is a purchase order for?

It records what you agreed to buy, at what price, before anything is delivered. When the supplier's invoice arrives, you check it against the PO. Without one, a disputed price is one person's memory against another's.

Is a purchase order the same as an invoice?

No, and they travel in opposite directions. You send a PO to your supplier to order goods. They send you an invoice to ask for payment.

Does a purchase order create a contract?

Usually it is an offer to buy, and the contract forms when the supplier accepts it. Some suppliers accept by acknowledgement and some simply by shipping. The position varies by jurisdiction and by whose terms apply, so for anything significant it is worth being explicit about which terms govern the order.

What if the supplier's price differs from the PO?

Query it before paying. That difference is exactly what the order exists to catch, and it is far easier to resolve before the invoice enters an approval queue than after.

Do small businesses need purchase orders?

Not for everything, but they earn their place as soon as more than one person can commit money, or as soon as a supplier's invoice ever arrives with a figure you did not expect.

Free Purchase Order Generator

Order goods from a supplier, on paper. Fill the form, watch it build itself, download the PDF. No sign up, no watermark, and nothing you type is sent anywhere.

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Who issues it, and which way it travels

A purchase order goes from the buyer to the supplier. It is the buyer saying what they want, at what price, before anything moves.

That is the opposite direction from an invoice, which travels from supplier to buyer asking for payment. Confusing the two is the most common mistake with this document.

The PO is also the thing that makes an invoice payable in most organisations. If accounts cannot match an invoice to an order somebody approved, it does not get paid, and the supplier is left chasing.

The three way match

Larger buyers check three documents against each other before releasing payment: the purchase order, the delivery note, and the supplier's invoice.

The order says what was agreed. The delivery note says what arrived. The invoice says what is being charged for. When all three agree, payment is routine.

This is why the PO number has to appear on the supplier's invoice, and why it is worth printing it clearly and asking them to quote it.

What to put on it

A PO number, unique and sequential, because everything downstream references it.

The delivery address and the date you need it by, which are frequently not the same as your billing address.

Each item with the quantity and the price you actually agreed, not the list price.

Who at your end approved it, for anything above a trivial value.

Any terms the supplier needs to accept: part delivery, packaging, a deadline after which you no longer want it.

When the delivery does not match the order

Check the goods against the order before signing anything. A signed delivery note is hard to argue with afterwards.

For a short delivery, record what actually arrived and expect an invoice for that rather than the full order.

If the supplier substitutes an item, that is a change to the order and needs your agreement rather than your silence. Amend the PO or raise a new one so the paper trail still matches what is on the shelf.

A worked purchase order

Harbourline Ltd is ordering stock from a supplier, and wants the price agreed before anything ships.

Purchase order PO-5512, raised 6 March, approved by the operations manager.
Deliver to: the warehouse address, which is not the billing address.
40 units at 18.50, agreed price, not list: 740.00.
Required by 20 March; after that the order lapses.

The PO number is the thing the supplier must quote on their invoice. Without it, accounts cannot match the invoice to anything and it does not get paid.

The agreed price is stated because that is what the order exists to prove when the invoice arrives at a different figure.

The delivery address is separate from the billing address, which is the most common cause of a consignment going to the wrong door.

How to make a purchase order

Enter your business and the supplier.
Give the PO a number and a delivery address.
List what you are ordering, with agreed prices.
Download the PDF and send it.

Questions about purchase orders

What is a purchase order for?: It records what you agreed to buy, at what price, before anything is delivered. When the supplier's invoice arrives, you check it against the PO. Without one, a disputed price is one person's memory against another's.
Is a purchase order the same as an invoice?: No, and they travel in opposite directions. You send a PO to your supplier to order goods. They send you an invoice to ask for payment.
Does a purchase order create a contract?: Usually it is an offer to buy, and the contract forms when the supplier accepts it. Some suppliers accept by acknowledgement and some simply by shipping. The position varies by jurisdiction and by whose terms apply, so for anything significant it is worth being explicit about which terms govern the order.
What if the supplier's price differs from the PO?: Query it before paying. That difference is exactly what the order exists to catch, and it is far easier to resolve before the invoice enters an approval queue than after.
Do small businesses need purchase orders?: Not for everything, but they earn their place as soon as more than one person can commit money, or as soon as a supplier's invoice ever arrives with a figure you did not expect.