A purchase order (PO) is a document a buyer sends to a supplier to formally request goods or services at agreed prices. Once the supplier accepts it, the PO becomes a binding agreement: the supplier commits to deliver what is listed, and the buyer commits to pay for it. POs flow in the opposite direction from invoices — the buyer issues the PO before delivery; the supplier issues the invoice after.
Even very small businesses benefit from POs, because they replace “can you send us 40 units when you get a chance?” emails with a numbered document both sides can track.
Why use purchase orders at all?
POs solve several problems at once:
- Clarity — quantities, prices, and delivery expectations are written down before money changes hands.
- Authorization — a PO proves the purchase was approved, which controls spending inside the buying company.
- Matching — the supplier’s invoice can be checked line-by-line against the PO before it is paid.
- Legal protection — an accepted PO documents the agreement if a dispute arises later.
- Planning — open POs show exactly what stock and costs are committed but not yet delivered.
What a purchase order must include
A complete PO mirrors the structure of an invoice: a unique PO number (its own sequence, e.g. PO-0031), the issue date, buyer and supplier details, a line-by-line list of the goods or services with quantities and agreed unit prices, expected delivery date and delivery address, payment terms, and the total value including any tax. The PO number is the critical field — it is the reference everyone uses from order to delivery to payment.
The purchase order template page shows the full layout, and the free purchase order generator fills it in for you with a live preview.
The purchase order process, step by step
A typical PO cycle looks like this:
- The buyer identifies a need and (often) requests a quote from the supplier.
- The supplier quotes; the buyer approves the spend internally.
- The buyer issues a numbered PO to the supplier.
- The supplier accepts the PO, confirming price and delivery.
- Goods or services are delivered, referencing the PO number.
- The supplier invoices, quoting the PO number on the invoice.
- The buyer matches invoice against PO (and delivery receipt) and pays.
Purchase order vs invoice
The two documents are easy to confuse because they list the same items and totals. The difference is who sends it and when: the buyer sends the PO before delivery to commit to the purchase; the seller sends the invoice after delivery to collect payment. In a well-run transaction the invoice references the PO number and matches its lines exactly — this “two-way match” is what accounts-payable teams check before releasing payment. For the seller’s side of the paperwork, see our guide on how to make an invoice.
Purchase order vs quote
A quote and a PO are both pre-delivery documents, but they come from opposite sides: the supplier proposes a price with a quote, and the buyer commits to buy with a PO — frequently in direct response to that quote. If you are the supplier, sending a clear quote first makes the buyer’s PO easy to raise and guarantees the numbers match. Our invoice vs quote guide covers that side of the flow.
Create a purchase order free, in minutes
The FreeInvoice purchase order generator lets you issue a professional, numbered PO from your browser: add your logo, list the items, set delivery details, and download a PDF ready to send to your supplier. No account, no cost, and drafts stay on your device.