Who issues a purchase order, the buyer or the supplier?

The buyer issues the purchase order to request goods or services. The supplier later issues an invoice to request payment and quotes the PO number so the two can be matched.

Is a purchase order legally binding?

Once the supplier accepts it, a PO generally forms a binding order for the stated goods, quantities, prices and terms. Add specific conditions in the terms section if you need them.

What is the difference between a PO and an invoice?

A purchase order is the buyer’s request to order; an invoice is the supplier’s request for payment. The PO comes first; the invoice references its number.

What Is a Purchase Order? (PO vs Invoice Explained)

A purchase order (PO) is a document the buyer sends to a supplier to confirm an order: what they want, how much, at what price, and where and when to deliver it. It turns a verbal or email agreement into a clear, trackable record — and it’s the first step in the “three-way match” that keeps buying under control.

What a purchase order includes

A unique PO number and the order date.
The buyer’s details and the vendor (supplier) details.
The ship-to address and required delivery date.
Line items with quantities and agreed unit prices.
Tax, the order total, and any terms.

Purchase order vs invoice

They’re easy to confuse because they list the same items, but they move in opposite directions. The buyer issues the PO to request goods or services. The supplier issues the invoice to request payment once the order is fulfilled. The supplier quotes the PO number on the invoice so both sides can match them.

The three-way match

Finance teams match three documents before paying: the purchase order (what was ordered), the packing slip or delivery note (what arrived) and the invoice (what’s being charged). If all three agree, the invoice is approved. This is why quoting the PO number on every related document matters.

When should a small business use POs?

Even solo businesses benefit from POs for larger or recurring purchases: they prevent surprise charges, create a budget trail, and give you something to point to if an order is wrong. For one-off small buys a PO may be overkill — use judgement.

Create a purchase order free

Our free purchase order template builds a clean PO PDF with a number, vendor, ship-to address and delivery date — no sign-up. When the goods arrive, create a matching packing slip from the same details.