Purchase Order (PO)
Also known as: PO
A purchase order (PO) is the official document a buyer sends to a supplier to confirm the order of goods or services at agreed prices and terms.
A PO is a legally binding offer once accepted by the supplier. It states the items, quantities, agreed prices, delivery details and terms, and carries a unique number used to track the order through receipt, invoicing and payment. POs create a clear commitment and an audit trail.
In a mature process, a PO is generated from an approved requisition and later matched against the goods received note and the supplier's invoice — the three-way match — before payment. Blanket POs cover repeated deliveries over a period under a single order.
Frequently asked questions
- What is a purchase order?
- A purchase order is the official document a buyer issues to a supplier confirming an order — the items, quantities, prices, delivery and terms — and it becomes binding once the supplier accepts it.
- What is a PO number used for?
- The unique PO number links the order to its requisition, goods received note and invoice, so the purchase can be tracked and reconciled through to payment.
Related terms
Purchase Requisition (PR)
A purchase requisition (PR) is an internal request to buy something, submitted for approval before a purchase order is created.
Read definitionBlanket Purchase Order
A blanket purchase order is a single order that covers multiple deliveries of goods or services over a set period at agreed prices.
Read definitionThree-Way Matching
Three-way matching is a control that checks the purchase order, goods received note and supplier invoice agree before an invoice is paid.
Read definitionPlanned Purchase Order
A planned purchase order is a long-term agreement to buy goods with tentative quantities and delivery dates that are firmed up later through scheduled releases.
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