A purchase order is the mirror image of an invoice: it comes from the buyer, not the seller, and it comes before the transaction, not after. It states what the buyer wants, in what quantity, at what price, and carries a unique PO number that later documents — delivery notes, invoices — refer back to.
Once the supplier accepts it, a PO is generally treated as a binding commitment to buy on the stated terms. Inside larger organisations it is also a spending control: no approved PO, no purchase.
Why It Matters
For sellers, the PO number is the key that unlocks payment. Clients that issue POs usually cannot process an invoice that fails to quote one — the invoice cannot be matched to an authorised purchase and stalls in accounts payable. For buyers, POs create the paper trail that catches over-billing: an invoice can be checked against the order before any money moves.
Example
An agency raises PO #PO-0451 with a freelance developer: 40 hours at $95/hour. The developer completes the work and invoices $3,800, quoting PO-0451. The agency’s bookkeeper matches invoice to PO in one glance and releases payment — no email thread required.
Frequently Asked Questions
Do freelancers need to issue purchase orders?
Rarely. Freelancers mostly encounter POs from the receiving end — a client issues one and expects the invoice to reference it. Issuing your own POs starts to pay off once you regularly buy materials or subcontract work.