What is a purchase order?
A purchase order (PO) is the document a buyer sends a supplier to place an order. It states the items, quantities, agreed prices and delivery details. When the supplier accepts it, it becomes a binding agreement, and its number links the later delivery note and invoice back to the order.
What a purchase order should include
- The buyer’s and the vendor’s names and addresses.
- A PO number, the order date and the date you need delivery by.
- Where the goods should be shipped, if that differs from the billing address.
- Each item with a clear description, quantity and unit price.
- Tax, shipping and the order total.
- Payment terms and any delivery instructions.
How to use the purchase order generator
- Enter your details, the supplier’s and the delivery address.
- Add a line for each item with its quantity and unit price.
- Add tax and shipping and write your terms.
- Choose Print / Save as PDF, sign it if your process needs a signature, and send it to the supplier.
Good to know
- Describe items the way the supplier does, with their product codes where you can. It prevents wrong deliveries.
- Ask the supplier to quote your PO number on their invoice; it makes matching invoices to orders quick.
- Check deliveries against the PO before you pay.
Frequently asked questions
What is the difference between a purchase order and an invoice?
The buyer issues a purchase order to place an order. The seller issues an invoice afterwards to request payment for it. The invoice should match the PO.
Is a purchase order legally binding?
It becomes a contract once the supplier accepts it, whether by confirming in writing or by starting to fulfil the order. Until then it is an offer to buy.
Do small businesses need purchase orders?
They are not required, but they help as soon as more than one person orders, or you buy the same things repeatedly. A PO is a record of exactly what was agreed.