Purchase Order vs Invoice: What Is the Difference?

A purchase order (PO) is sent by the buyer to the seller before a sale to confirm what they want to buy and at what price. An invoice is sent by the seller to the buyer after the goods or services are delivered to request payment. In short, the purchase order starts the deal and the invoice closes it.

Purchase order vs invoice at a glance

	Purchase order	Invoice
Who sends it	The buyer	The seller
When	Before the order is fulfilled	After delivery or at a milestone
Purpose	Authorises a purchase	Requests payment
Key number	PO number	Invoice number
Shows	Items, quantities, agreed prices, delivery date	Items delivered, amounts, tax, total due, due date
In accounts	A commitment, not yet a cost	An amount owed (payable for the buyer, receivable for the seller)

What is a purchase order?

A purchase order is a buyer's formal request to buy. Larger companies use them to control spending: someone approves the PO before anything is ordered, so every purchase has a budget owner. A PO usually lists the supplier, the items or services, quantities, agreed prices, delivery address and date, and a unique PO number. Once the seller accepts it, the PO acts as an agreement on what will be supplied.

What is an invoice?

An invoice is the seller's request for payment once they have delivered. It shows what was supplied, the amounts, any tax, the total due and the payment terms. Read our full guide to what an invoice is for the details.

How purchase orders and invoices work together

1. The buyer raises and approves a purchase order.
2. The buyer sends the PO to the seller, who accepts it.
3. The seller delivers the goods or completes the work.
4. The seller sends an invoice that quotes the PO number.
5. The buyer's accounts team matches the invoice to the PO and the delivery record, then pays.

That matching step is often called three way matching: the PO, the delivery note and the invoice must agree. If the quantities or prices on your invoice do not match the PO, payment is usually held until the difference is fixed.

Why the PO number matters on your invoice

If a client gives you a PO number, always put it on the invoice. Many companies cannot pay an invoice without one, and an invoice with a missing or wrong PO number can sit unpaid for weeks. In the free invoice generator, open More options in the invoice details and type the PO number. It then appears on every template.

Example

A marketing agency asks a freelance writer for four blog posts. The agency raises PO-5521 for 4 posts at $200 each, $800 in total, and sends it to the writer. When the posts are delivered, the writer sends invoice INV-2026-014 for $800 with the reference PO-5521. The agency's accounts team matches the two documents and pays within its Net 30 terms.

Do you need a purchase order to send an invoice?

No. Most small businesses and freelancers invoice without a PO, based on a quote or a simple agreement. POs are mainly used by larger companies and public bodies. If your client uses them, ask for the PO number before you start the work, not when you invoice.

Purchase order vs quote and receipt

A quote comes from the seller before the buyer agrees to buy. A purchase order comes from the buyer to accept and authorise the purchase. An invoice asks for payment, and a receipt confirms payment was made. See quote vs estimate vs invoice and invoice vs receipt for the rest of the paper trail.

Frequently asked questions

Is a purchase order the same as an invoice?

No. A purchase order is sent by the buyer to authorise a purchase before delivery. An invoice is sent by the seller after delivery to request payment.

Which comes first, a purchase order or an invoice?

The purchase order comes first. The buyer sends it before the work or delivery, and the seller sends the invoice afterwards.

Where does the PO number go on an invoice?

Put it near the invoice number and dates, labelled PO number. This lets the client's accounts team match the invoice to their order quickly.

Is a purchase order legally binding?

Once the seller accepts it, a purchase order usually forms a binding agreement on what will be supplied and at what price. Check local law for your situation.