Invoice vs Purchase Order: What's the Difference?

A purchase order (PO) is a document the buyer creates to order goods or services. An invoice is a document the seller creates to request payment for them. The PO comes first; the invoice comes after delivery.

	Purchase order	Invoice
Created by	Buyer	Seller
Timing	Before delivery	After delivery (or at milestones)
Purpose	Authorize and record a purchase	Request payment
Key number	PO number	Invoice number
In accounting	Commitment (not yet a liability)	Liability for the buyer; receivable for the seller
Legally	An offer to buy; accepted, it can form a contract	Evidence of amount owed

How they work together

In a company with a formal purchasing process:

1. You send a quote.
2. The buyer raises a purchase order for that amount and sends it to you. That's their approval to spend.
3. You deliver.
4. The buyer's warehouse or project owner records a goods received note (or confirms the service was performed).
5. You send an invoice quoting the PO number.
6. Accounts payable does a three-way match: PO, delivery record and invoice. If all three agree, it's scheduled for payment.

If they don't match (wrong PO number, a different amount, extra items), the invoice gets put on hold and someone emails you. That's where the "weeks of delay" stories come from.

Why your PO number matters so much

For many companies, an invoice with no PO number is simply unpayable, because their system can't match it to an approved purchase. Always:

• Ask for a PO before starting work with a new corporate client
• Copy the PO number exactly onto your invoice
• Keep the invoice amount within the PO amount, or get the PO increased first

More in where to put a PO number on an invoice.

Does a small business need purchase orders?

If you're the buyer, POs help once you have several people ordering things or suppliers on account. They stop surprise invoices and make it easy to check what was actually approved. For a one-person business, a quote accepted by email does the same job.

If you're the seller, you don't create POs. You receive them.

Blanket and open POs

For ongoing work, some clients issue a blanket PO covering a period or an amount ("up to $20,000 of design services in 2026"). You invoice against it repeatedly, quoting the same PO number, until it's used up. Keep track of the remaining balance yourself, and ask for a new PO before you run out.

Quick answers

Is a PO legally binding? Once you accept it (by confirming or by delivering), it can form a contract on its terms. Read PO terms and conditions; some big companies attach long ones, including payment terms longer than you expected.

Can the invoice differ from the PO? It should match. If the scope changed, ask for a revised PO or a change order before invoicing.

What if the client never sent a PO? Ask them whether they need one before you invoice. It's much easier than chasing a rejected invoice later.

What's on a purchase order

A typical PO includes:

• The buyer's company details and the PO number
• Your details as the supplier
• Order date and required delivery date
• Items or services, quantities and agreed prices
• Delivery address
• Payment terms
• The buyer's terms and conditions, or a link to them
• An approver's name or signature

Example: a PO and the invoice that matches it

	Purchase order PO-7781	Your invoice INV-0233
From	Harbor & Pine Co. (buyer)	Northfield Studio (seller)
Date	2 September	19 September
Item	Product photography, 20 SKUs	Product photography, 20 SKUs (shot 12 Sept)
Amount	$2,000.00	$2,000.00
Terms	Net 30	Net 30, due 19 October
Reference	–	PO-7781

Same item, same amount, the PO number quoted: this invoice goes straight through a three-way match. Change any of those, and it stops for a human to look at.