Purchase Order (PO)

A document a buyer sends to a supplier to formally order goods or services at agreed terms.

A purchase order is an official offer issued by a buyer to a supplier listing the products or services, quantities, agreed prices and delivery terms. Once accepted, it becomes a binding contract.

POs create an audit trail for procurement, help match deliveries and invoices (three-way matching), and control spending. The supplier later sends an invoice referencing the PO.

• Buyer-issued order that becomes binding when accepted.
• Enables three-way matching (PO ↔ goods receipt ↔ invoice).
• Controls and documents procurement spend.