A purchase order (PO) is an official document issued by a buyer to a supplier that confirms an order — specifying products, quantities, prices and terms — and becomes a binding contract once accepted.
A purchase order (PO) is an official document that a buyer issues to a supplier to confirm the purchase of specific goods or services. It records exactly what is being ordered — products, quantities, agreed prices and terms — and, once accepted by the supplier, becomes a legally binding contract between the two parties.
The purchase order is a central document in professional procurement. It follows the Request for Quotation and supplier selection, and it sets the terms that later documents such as the proforma invoice and commercial invoice will reflect.
A purchase order is a formal commitment from a buyer to purchase from a supplier under agreed conditions. It is created by the buyer, sent to the supplier, and becomes binding when the supplier confirms acceptance. By putting the order in writing, the PO protects both sides: the buyer knows what will be delivered and at what price, and the supplier has clear authorisation to produce and ship the goods.
The purchase order sits at the heart of the buying cycle. After a buyer reviews quotations from an RFQ and selects a supplier, the buyer issues the PO. The supplier reviews and accepts it, often confirming with a proforma invoice. The goods are then produced and shipped, and the supplier issues a commercial invoice to request payment. The PO number links all of these documents together, making the transaction easy to track and audit.
A purchase order and an invoice are opposite ends of the same transaction. The purchase order is created by the buyer before delivery to request and confirm the goods. The invoice is created by the seller after delivery to request payment. Matching the invoice against the purchase order — often together with the delivery or packing documents — is a standard control that ensures the buyer pays only for what was ordered and received.
Purchase orders bring clarity and control to procurement. They create a documented, binding agreement that reduces the risk of disputes over quantity, price or terms. They support accurate budgeting, inventory planning and accounting, and they provide an audit trail that links quotations, orders, shipments and payments. For international B2B trade, where buyer and supplier are in different countries, a clear purchase order is essential to a smooth transaction.
Effective purchase orders use unique, traceable PO numbers, state the specification and quantity precisely, and clearly set out Incoterms, delivery dates and payment terms. Keeping the PO consistent with the original quotation and the later invoice avoids mismatches and delays. Confirming supplier acceptance in writing turns the PO into a reliable, enforceable agreement.
A purchase order is the document that turns a sourcing decision into a firm, binding order. By recording the products, quantities, prices and terms, the PO protects both buyer and supplier, links the documents of a transaction together, and keeps procurement organised and auditable. For B2B buyers working with verified suppliers, a well-prepared purchase order is the foundation of a dependable, professional trading relationship.