A Purchase Order (PO) is a commercial document issued by a buyer to a seller indicating types, quantities, and agreed prices for products or services. Purchase orders can be an essential part of enterprise resource planning (ERP) system orders. Purchase orders allow buyers to communicate their intentions clearly and explicitly to sellers.
What are the differences between Purchase Orders and Invoices?
Both purchase orders and invoices contain similar information, such as a billing address, and shipping address.
Invoice is usually a document issued by the seller to the buyer showing items which have been sold, payments, and signatures of buyer and seller. Invoices typically reference the purchase order number, with the addition of an invoice number to confirm that both documents are related and correspond with one another. It shows that the buyer has some money to give to the seller after showing the list of products the seller grants to the buyer. Many invoices these days are issued using online software.
Making use of an invoice helps you to track the money you make and your expenses as a seller. It also helps in inventory checking and management and helps you to calculate the profit made. They also serve as a reference for all your business transactions and gives you a measure of control over your business and to monitor your progress.
Whereas a Purchase Order is a document that is sent from the buyer to the seller or vendor to grant a purchase. A purchase order indicates the items the buyer decides to buy and the prices. Sometimes the purchase order may allow a company to order a particular product as many times as possible for a certain period. Many purchasing systems exist today which can record what has been ordered, what has arrived and what is not invoiced.