Purchase order: the commitment that exists before the invoice does

A purchase order is the document a buyer issues to a supplier stating exactly what is being bought, in what quantity, at what price and on what terms. Once the supplier accepts it, the purchase order is a contract — which is why it carries a number, a date and an authorisation, and why issuing one after the goods have arrived defeats the entire point.

The order exists to move the commitment forward in time. Without it, the first time anyone in finance learns of a spend is when the invoice arrives, by which point the money is already owed and the only remaining question is who approved it. With it, the commitment is recorded, budgeted against and approved before anything is bought.

What a purchase order contains

• A unique PO number, used on every document that follows — delivery note, invoice, remittance.
• Buyer and supplier details, including the delivery address and the invoicing address when they differ.
• Line items: description, quantity, unit price, tax treatment, total.
• Delivery date required, and the incoterm or delivery basis where goods cross a border.
• Payment terms, agreed in advance rather than dictated later by the supplier’s invoice.
• The authorisation — who approved this spend, and under what limit.
• Reference to the framework agreement or contract the order is placed under, if there is one.

The three-way match

The purchase order earns its place in the process by making the three-way match possible: the order says what was agreed, the goods received note says what arrived, and the invoice says what is being charged. Where all three agree, the invoice can be paid without further approval. Where they do not, the difference is visible and specific rather than a vague sense that something is wrong.

This is what removes most of the friction from accounts payable. Invoices that match are paid on time; only exceptions need a human. Teams that skip the order find that every invoice needs someone to remember what was agreed, and that memory is the least reliable control in any finance function.

A purchase order raised after the invoice arrives is not a control, it is a formality. If retrospective POs are common, the problem is not the process — it is that buying is happening outside it, and no amount of paperwork afterwards recovers the negotiating position that was lost.

Requisition, order, contract

1. A purchase requisition is internal: someone asks for permission to buy. It never leaves the company.
2. The requisition is approved against a budget and a delegated authority limit.
3. A purchase order is then issued to the supplier — external, numbered, and binding once accepted.
4. Goods or services are delivered and receipted against the order.
5. The supplier invoices quoting the PO number; the invoice is matched and paid.

Confusing the first two is common and expensive: an unapproved requisition sent to a supplier as if it were an order commits the company to a spend nobody authorised.

Because the order, the receipt and the invoice all reference the same lines, they belong in one place rather than in three systems that reconcile monthly. Ettex Invoices holds the order and the invoice against the same record, so the PO number travels through to payment and invoice processing stops being an exercise in matching PDFs by hand.

Making the numbers usable

A purchase order number is only useful if it survives the round trip. Put it on the order, require it on the invoice, print it on the delivery paperwork, and quote it on the remittance. Suppliers who are told the invoice will be returned without a PO number generally include one; suppliers who are told nothing generally do not.