Purchase Order vs Invoice: Key Differences
A purchase order is sent by the buyer to order goods at agreed prices. An invoice is sent by the seller after delivery to ask for payment. The PO number links the two.
What is the difference between a purchase order and an invoice?
A purchase order (PO) is the buyer's document: it orders goods or services at stated quantities, prices and terms. An invoice is the seller's document: it asks for payment for what was delivered. The PO comes first, the invoice comes after, and the PO number printed on the invoice links them.
Purchase order vs invoice at a glance
| Purchase order | Invoice | |
|---|---|---|
| Sent by | Buyer | Seller |
| Sent when | Before delivery, to place the order | After delivery or shipment |
| Purpose | Order goods and set the terms | Request payment |
| Legal effect | An offer; a contract once the seller accepts it | A record of the sale and a demand for payment |
| In the books | A commitment (not yet an expense) | Accounts payable for the buyer, a sale for the seller |
| Reference number | PO number, set by the buyer | Invoice number, set by the seller, plus the PO number |
How they work together
- The buyer sends a purchase order with items, quantities, prices, delivery date, Incoterm and payment terms.
- The seller accepts it, often with an order confirmation or, in international trade, a proforma invoice.
- The seller delivers or ships the goods.
- The seller issues an invoice quoting the PO number. For exports, this is the commercial invoice.
- The buyer matches the PO, the goods receipt and the invoice, then pays.
Example
A restaurant group sends PO-2026-0147 to a kitchen supplier for 40 stainless steel prep tables at 220.00 each, total 8,800.00, payment 30 days. The supplier delivers 40 tables and invoices INV-5521 for 8,800.00, quoting PO-2026-0147. Accounts payable matches the two with the delivery note and pays on day 30. If only 36 tables had arrived, the buyer would hold the invoice until a corrected one for 36 was issued.
Common mistakes
- Invoicing without the PO number. The invoice cannot be matched and waits.
- Prices that differ from the PO. Any change must be agreed and, ideally, the PO amended.
- Treating the PO as the bill. Buyers pay invoices, not purchase orders.
Need a PO? Use the purchase order generator.
Features
- Side by side comparison table
- Who sends each one and when
- How they work together
- Common mistakes
Frequently asked questions
What is the difference between a purchase order and an invoice?
A purchase order is sent by the buyer to order goods at agreed prices and terms. An invoice is sent by the seller after delivery to request payment.
Which comes first, a purchase order or an invoice?
The purchase order. The buyer orders first; the seller invoices after delivering or shipping the goods.
Is a purchase order a contract?
A purchase order is an offer to buy. It becomes a binding contract when the seller accepts it, in writing or by delivering.
Does an invoice need a PO number?
When the buyer issued a purchase order, yes. Most buyers need the PO number on the invoice to match and pay it.
Can I be paid without a purchase order?
Yes, many sales have no PO. But buyers that use purchase orders often cannot pay an invoice that does not refer to one.