Purchase Order vs Invoice: Key Differences

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

1. The buyer sends a purchase order with items, quantities, prices, delivery date, Incoterm and payment terms.
2. The seller accepts it, often with an order confirmation or, in international trade, a proforma invoice.
3. The seller delivers or ships the goods.
4. The seller issues an invoice quoting the PO number. For exports, this is the commercial invoice.
5. 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.