Purchase order (PO)
Definition
A purchase order (PO) is the official document a customer uses to confirm an order with a supplier, listing products, quantities, prices and delivery terms. Large customers often require a purchase order as proof before their accounting department approves an invoice.
The proof that makes an order official
Where a consumer just "orders", a business purchase often goes through internal approval that results in a purchase order. That order later serves as a reference when checking the invoice.
PO number on the invoice
Many large customers expect the purchase order number to appear on the supplier's invoice, otherwise payment gets delayed or refused.
Practical example
A customer places an order through their own procurement system, which generates a PO number. The supplier processes the order and references the same number on their invoice.
Related terms
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