What is the difference between purchase orders and invoices

ZipBooks free online invoicing app makes invoicing your customers for goods or services easy. In just a few clicks, you can send custom invoices to your clients, get paid via credit card, PayPal, or Stripe, and get notified when your customer pays their balance. Login Sign up. What is a purchase order? A PO generally includes: Date of order PO number Details of products ordered Name and address of buyer Name and address of seller Terms and conditions Signature of issuing authority How are purchase orders used?

What is an invoice? An invoice generally includes: Date of issue Invoice number PO number Quantity of goods ordered Price of each good purchased Discounts if applicable Taxes if applicable Total amount due Name and address of buyer Name and address of seller Signature of seller or authorized agent How are invoices used?

What are the similarities and differences between invoices and purchase orders? The PO is prepared by the buyer when they order goods or services, while an invoice is created by the seller to request payment for the goods sold. The PO is sent to the seller, while the invoice is sent to the buyer.

The PO lists the order details and the delivery date of the order, while an invoice includes the price of the order, terms and conditions of payment, and the payment due date. A PO is generated when the customer places the order, while an invoice is generated after the order is complete. A PO details the contract of the sale, while an invoice confirms the sale.

Buyers use POs to track accounts payable and sellers use invoices to track accounts receivable in their accounting records. Both the PO and the invoice include details about the order and shipping specifics, but the invoice also includes the invoice number, date of delivery, and PO number. Both the PO and the invoice are legally-binding documents. Consent Management Cookie Settings. This site uses cookies: Find out more. The deal is set. John has a lot of customers and is often out and unavailable.

Typically, his mobile phone goes directly to voicemail. So, at the beginning of each conversation, Dan references the purchase order number. Two weeks later, when Dan is on vacation, the order arrives. The shipment arrives at head office. Now accounting and inventory files have been updated. They are sure to include the purchase order number.

So, he adjusts the payment date. Dan gets paid on time. You can see that the purchase order and the purchase order number are important tools for both buyers and sellers alike. You can unsubscribe at any time by contacting us at help freshbooks. We use analytics cookies to ensure you get the best experience on our website.

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They help manage payments Invoices show what goods or services were sold, how much money has been paid to date, and any outstanding charges. They help companies keep track of payments in a formal way.

Some of the benefits of invoices are similar to that of purchase orders. An invoice shows that a particular good or service was provided and when payment is expected. Invoices prove that businesses are charged for a good or service in case payment is not received.

Like POs, they are a key part of audit trails Auditors require evidence of all money going in and out of businesses. Since invoices show exactly what a business was charged for a good or service, they are a crucial part of this evidence. Understanding the roles that invoices and purchase orders play is important for anyone involved in purchasing goods or services on behalf of an organization. The key difference between a purchase order and an invoice is that a purchase order is sent from a purchaser to a vendor to place an order while an invoice is sent from a vendor to a purchaser to request payment for an order.

Enter your email below to begin the process of setting up a meeting with one of our product specialists. What is a purchase order? Here is a sample purchase order: What is an invoice? Here is a sample invoice: What is the difference between a purchase order and an invoice? Here are all of the differences for purchase order vs invoice: Key Info Purchase Order Invoice What it is Official confirmation of an order Request for payment for an order Who initiates it Purchaser Vendor Who receives it Vendor Purchaser When it is sent At the onset of an order After the order is complete per the payment terms What it contains Date purchase was made Name of the company purchasing the goods or services Description and quantity of the goods or services Price Payment information Billing address Purchase order number Shipping address Expected delivery date Same information as on purchase order, plus: An invoice number Vendor contact information Credits or discounts Payment schedule Total amount due to the vendor What are the similarities between a purchase order and an invoice?

While these documents are quite different, there are a couple of similarities. Why do companies use purchase orders?

Whether it is in a small business or a large organization with a full purchasing department, purchase orders are used for several reasons: They set clear expectations POs enable purchasers to clarify their needs to vendors.