![]() You want to track your pending spending and inventory and manage your cash flow.You are ordering a large quantity and want to have a written record of your order to avoid misunderstandings or disputes with the supplier.You want to specify details such as goods or services quantity, specific quality, price, expected delivery date, payment terms, etc.You are a buyer initiating the buying process and want confirmation on the order details.Now that we have covered the key difference and similarities, let's look at the use case of purchase order vs invoice. As they both provide evidence of the business transaction, they are useful for auditing, accounting, tax, inventory control and budgeting.Both documents follow a similar format and layout, usually with headings, tables, and totals.Both documents outline product or service details such as quantities and prices.Similarities Between a Purchase Order and an InvoiceĪlthough there are differences between a purchasing order and an invoice, they share several similarities. □ Tip: while an invoice is not legally binding in itself, it can be used to form a buyer-seller agreement, taken that the buyer's approval of an invoice implies consent to its terms and conditions. On the other hand, an invoice on its own lacks legal standing as it is not usually signed or needs to be signed by the buyer, and there is no clear indication that both parties have accepted its term. Once the seller accepts the terms and conditions, it becomes a legally binding document. Legal BindingĪ purchase order must be acknowledged or signed by the seller to be valid. ![]() In contrast, the timing of issuing an invoice depends on the seller's billing process and schedule. Hence, a purchase order is sent before an invoice in most scenarios.Īdditionally, the timing of issuing a purchase order depends on the buyer's procurement process and approval procedures. ![]() TimingĪ purchase order is usually issued before the delivery of goods, whereas an invoice is usually sent after the goods have been delivered. ![]() On the other hand, unique content in an invoice includes corresponding purchase order, invoice number, credits or discounts, and applicable taxes added.Īn invoice may include a purchase order or a purchase order number, but not typically vice versa. Unique content in a purchase order includes billing address, shipping address, purchase order number (PO number), and delivery terms. ContentĪlthough the core content of purchase orders and invoices is very similar – often comprising goods or service specifics, contact information for both parties and an agreement on terms – there is unique information specific to each document. In businesses, the sender of purchase orders is usually a purchasing department, while the sender of invoices is usually the billing department. SenderĪ purchase order is sent by a customer, whereas an invoice is sent by the vendor. On the other hand, an invoice aids the seller in keeping a record of sales and is helpful for stock management. In addition, a purchase order assists the buyer in monitoring the progress and status of the order, as well as maintaining a record of spending and pending expenses. In essence, a purchase order's purpose is to request confirmation from the seller to supply goods, whereas an invoice's primary purpose is to request invoice payment for goods rendered.
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