Back to Glossary
Invoice Types
Purchase Order
Definition
A document issued by a buyer to a seller authorizing a purchase transaction.
Overview
A purchase order (PO) is a commercial document that buyers use to request goods or services from sellers. It becomes legally binding once accepted by the seller and serves as a contract.
Example
A company issues PO #1234 for 100 laptops at $1,000 each before the supplier ships the equipment.
Best Practices
Buyers issue POs before receiving goods. Sellers match invoices to POs for payment processing.
Common Mistakes to Avoid
Not matching invoice to PO
Missing PO numbers on invoices
Changing terms without amendment
Frequently Asked Questions
Is a purchase order legally binding?
Yes, once accepted by the seller, a PO becomes a legally binding contract.