Blog · Purchase order basics

Purchase order vs invoice: what’s the difference?

Published 8 October 2026 · 5 min read

A purchase order (PO) is the buyer’s document: it goes to the supplier before anything is delivered and says what you’ve agreed to buy, at what price. An invoice is the supplier’s document: it comes back after delivery and asks to be paid. The PO number quoted on the invoice is what lets accounts payable check one against the other. Neither document moves any money on its own.

Who sends each one, and when

The two documents travel in opposite directions. The buyer sends the purchase order once the purchase has been approved internally. That’s the moment you commit. The supplier sends the invoice later, usually once the goods have arrived or the work is done, or on agreed dates for a longer job.

So the PO opens the transaction and the invoice closes it. In between, the supplier delivers, and someone on your side should confirm what actually turned up.

• Purchase order: buyer to supplier, before delivery. It says “please supply this, on these terms”.
• Invoice: supplier to buyer, after delivery or at an agreed stage. It says “this is what you owe us”.

What each one contains

They look alike because they describe the same purchase, but each carries details the other doesn’t.

A purchase order shows the buying entity’s legal name and address, the supplier, a PO number and date, each item with its quantity and unit price, the total, the delivery address and date, and the terms you’re buying on.

An invoice shows the supplier’s details, its own invoice number and date, what was supplied, the amount due, the tax, the payment terms and the supplier’s bank details. A tax invoice also has to meet local rules: HMRC in the UK and SARS in South Africa each set out what a valid VAT invoice must show, and your accountant can confirm what applies to you.

From your side, the field on the invoice that does the work is the one the supplier copies from your order: your PO number.

How the PO number ties them together

Every PO should carry a unique number, and suppliers should be asked to quote it on every invoice. Many buyers print that request on the order itself.

With the number on the invoice, accounts payable can find the order straight away, see who approved it and for how much, and check the invoice against it. Without it, someone has to work out which purchase the invoice belongs to, often by emailing round the office.

One order can lead to several invoices, for part deliveries or stage payments, and each should quote the same PO number. That shows how much of the order has been billed so far, and makes it obvious when the total invoiced creeps past what was agreed.

What accounts payable checks when there is a PO

With an order to check against, the work is quick and mostly mechanical. A typical check covers:

• The PO number exists, is still open and belongs to this supplier.
• The items, quantities and prices match the order.
• Someone has confirmed the goods or service arrived. Checking the order, the delivery note and the invoice together is known as three-way matching.
• The same bill hasn’t already been paid under a different invoice number.
• The tax is calculated correctly and the invoice meets the local rules for a valid tax invoice.

When the invoice arrives without a PO

Without an order, accounts payable has to go looking for the authority after the money has already been committed. Usually they forward the invoice to whoever they think ordered it, ask them to confirm it’s genuine and the price is right, then find someone with the authority to approve the spend.

That takes longer, and it’s weaker control. The person confirming the invoice is often the person who placed the order, so nobody independent agreed the spend before it happened. It’s also where duplicate and false invoices slip through, because there’s no agreed amount to compare against.

Some spend never has a PO and doesn’t need one: rent, utilities, small card purchases. Decide which categories those are, write them down, and treat any other invoice without a PO number as an exception to chase rather than a bill to pay.

Two common confusions

A purchase order is not a payment. Issuing a PO commits you to buy on the terms it states, once the supplier accepts it. It doesn’t move any money. Even when a supplier wants paying upfront, they usually send a pro forma invoice for that, and paying it is a separate step from the order.

An invoice is not an authorisation. An invoice tells you what the supplier believes you owe. It doesn’t show that anyone on your side agreed to the purchase. Paying an invoice simply because it arrived, on a convincing letterhead for a plausible amount, is exactly how invoice fraud works. The authority to spend comes from your own approval, and the PO is the record of it.

Purchase order and invoice side by side

The same purchase, seen from each document:

When the invoice doesn’t match the PO

Small differences are normal. A delivery charge gets added, a price moves, a part delivery is billed early. What matters is deciding in advance what you’ll accept and who decides the rest. A common approach:

• Within a small tolerance you’ve set, such as a rounding difference: pay it and note the difference.
• Wrong price or quantity: ask the supplier for a credit note or a corrected invoice. Don’t edit the invoice yourself.
• More than was ordered: check with the requester whether it was wanted. If it was, the extra spend needs approving like any other purchase, by someone whose authority covers the new total.
• Items that aren’t on the order: treat them as a new purchase without a PO and get them approved before paying.
• The order changed after it was sent: issue a revised PO, so the order and the invoice tell the same story and the record shows who agreed the change.

Questions

Is a purchase order legally binding?

Once the supplier accepts it, in writing or by delivering, a purchase order usually forms a contract on the terms it states. Before that it’s an offer you can normally withdraw. The detail depends on your terms and where you trade, so check with your adviser for anything significant.

Can a supplier invoice without a purchase order?

Yes. Nothing stops a supplier sending an invoice, and some spend never has a PO. If your policy says purchases need one, hold the invoice until someone with the authority approves the spend, and ask the supplier to quote a PO number next time.

Do I need both a purchase order and an invoice?

You need a valid invoice to pay a supplier and, if you’re VAT registered, normally to claim back the VAT. The PO is your own control: it’s how spending gets agreed before it happens.

What’s the difference between a PO number and an invoice number?

You set the PO number, and it identifies your order. The supplier sets the invoice number, and it identifies their bill. A good invoice shows both, which is what lets you match one to the other.