Glossary · Invoices and billing
Purchase order (PO)
A purchase order is the buyer’s document authorising a purchase. Many companies won’t pay an invoice that doesn’t quote a valid PO number.
A purchase order is issued by the buyer before work starts. It states what is being bought and at what price, and carries a PO number the supplier must quote on its invoice.
Larger customers run a three-way match: their accounts-payable system checks the invoice against the PO and against confirmation that the goods or services were received. An invoice that doesn’t match — no PO number, a different amount, a PO that has run out — is parked until someone fixes it, often without anyone telling you.
For service firms the fix is upstream: get the PO before starting, check its value covers the work, and put the PO number on every invoice and reminder.
Example
A consultancy invoices €12,000 against a PO raised for €10,000. The client’s system rejects the invoice automatically, and payment waits until a new PO for the difference is approved.