What Is A Purchase Order?
A purchase order is commonly used in business transaction. This document records the transactions from the quantities or the product , types and price. Besides, in the purchase order the customer will know how the payment will be done and how the goods will be delivered.
If you have a long term customer that always order the same products, then you can use “standing purchase order” and differenciate it with the series of PO number. Some people often mistakenly understand the purchase order and purchae requisitions. These are two different things. A large company often use the purchase requisitions internally to get the approval of spending. However, this is not always needed in the smaller business.
What Is Invoice?
Most people often think purchase order and invoice are the same. In fact, this is used differently. An invoice is used as a response of a purchase order. So, the PO always comes before the invoice.
How Is A Puchase Order Used?
A purchase order is used to manage the payments, clarify the order and track the order status during audit session. This document is sent by the customers to the vendor or supplier , telling how much product needs to be delivered to the customer. Besides, the purchase order will tell when is the payment.
There is a benefit of using a purchase order, this will avoid your business to be overstocking, prevent mixed up orders and also ensuring the customer receive the right goods.
Meanwhile, the invoice will help the small business to track the expense and revenue as well as providing good records about the customer’s purchase. Besides, keeping the invoice will make you easier handling the business taxes as this will show how much revenue you earned during the tax year.
What Are The Similarities Between Purchase Order and Invoice?
- The invoice is delivered by the customer when they want to oderder goods or services. Meanwhile the invoice is made by the seller as a payment proof.
- The invoice is delivered to the customer and the PO is sent to the supplier or seller.
- The PO only list the details of the goods that will be purchase and the date of the order. Meanwhile the invoice will have another details such as terms and condition, price of the order, payment due date and so on.
- PO is only generated before the order, and theinvoice will be issued after order is made.
- The PO confirms the sale contract, and the invoice confirms the sale.
With a purpose making your job easier, we provide you PO template that will only help you write down the PO to your supplier but also make it accurate. The template is already available to download. It is free and you can personalize and customize as you need. The designs are professional so it is fit for any kind of business type. Each templates will be able to help you calculate the balance and the totals of the product.
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