Frequently Asked Questions
What is a purchase order?+
A purchase order (PO) is a formal document sent by a buyer to a seller authorizing the purchase of specific goods or services at agreed prices.
Is a purchase order legally binding?+
Yes, once a vendor accepts a purchase order, it becomes a legally binding contract. Always keep copies of issued and accepted POs.
What is the difference between a PO and an invoice?+
A PO is created by the buyer before purchase. An invoice is created by the seller after goods or services are delivered requesting payment.
Do small businesses need purchase orders?+
POs help with budget control, dispute resolution, and record keeping even for small businesses. They are especially useful for repeat purchases.
How do I number purchase orders?+
Use a consistent format like PO-YYYY-001, PO-YYYY-002. Include the year so you can easily identify when orders were placed.