Documentation and record-keeping is a necessary process in every business. Documents such as an invoice and purchase orders are as important in business as other documents that are being used. An invoice PO number is an important element of an invoice. This helps businesses easily track purchases made.

In every transaction, providing a purchase invoice ensures that you have a record of a buyer’s orders and an invoice helps you receive payment on time for the products delivered. Read more about the use of invoice and purchase orders below. You can also check on our blank invoice templates and invoice formats by clicking on the links provided.

What Is the Difference between a Purchase Order and an Invoice?

A purchase order and an invoice are both essential documents in the daily operations of businesses. A purchase order and an invoice are both used in every business transaction to ensure that orders are processed and payments are collected. When a buyer does a purchase or makes an order, a purchase order is issued. This contains the list of products that a buyer is going to purchase, as well as the quantity, and the individual and total prices of the goods and products. After a buyer issues a purchase order, the products and goods are then processed for delivery.

An invoice is also another important part of a transaction. After the items have been delivered to the buyer, an invoice is then provided by the seller to the buyer. Usually a business has a number of terms set for the buyer. For example, the purchased products can be paid by the buyer after a month, depending on the terms. The business then issues a sales invoice to request for a payment and also as acknowledgment from the buyer that they have received the products specified in the invoice. Refer from our sample invoice to help you format you invoice.

Purpose and Importance of Purchase Orders

Although it is simpler and easier to do orders verbally, this can have drawbacks, especially in businesses. A purchase order is a form of legal document that can be used as proof in the event that a buyer fails to pay for the products or goods that he or she has ordered. You may use an invoice format as reference when creating your invoices and purchase orders. Now, let’s go over the importance and the purpose of purchase orders in business.

  • A purchase order will ensure that you do not have duplicate orders. A purchase order keeps a records of the purchases, which enables you to keep track of them. This allows you to prevent any duplicate orders since only one person is in charge of receiving them through a PO.
  • Written documents and records are useful and necessary in company audits. Information contained in the purchase order is essential, especially in a financial audit.
  • Through a purchase order, both the seller and the buyer have agreed upon on the price before the purchase is made. This will give the buyer a clear list of the prices avoiding any disagreements.
  • If there are any disputes, a purchase order can be used as proof.

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