Invoicing

What Is a Purchase Order? A Plain-English Guide

6 min readUpdated August 10, 2026

A purchase order (PO) is a document a buyer sends to a seller to formally authorize a purchase before it happens. It’s more common in B2B transactions and larger organizations than in typical freelance or small-business invoicing, but it’s worth understanding if you ever work with clients who use them.

What a purchase order includes

A PO typically covers the same core details as a quote, framed as an authorization rather than a proposal:

A unique PO number
What’s being purchased — items or services, quantities, and agreed price
Delivery or completion terms
The buyer’s billing and shipping details

How POs work in practice

A buyer’s internal team issues a PO once a purchase is approved, often after receiving a quote from the seller. The seller then fulfills the order and references the PO number on their invoice, which the buyer’s accounts payable team matches against the original PO to confirm everything lines up before paying.

When you actually need one

Most freelancers and small businesses never issue POs themselves — you’re more likely to receive one from a client, especially a larger company with a formal procurement process. If a client mentions a PO number, include it prominently on your invoice; without it, their accounts payable system may reject or delay the payment entirely.

Why larger companies rely on them

POs give a company internal control over spending — approving the purchase before it happens, rather than discovering it after an invoice arrives. For a vendor, having a PO in hand also reduces payment disputes, since it’s documented proof the purchase was authorized in advance.

FAQ

Do freelancers need to issue purchase orders?

Rarely — POs are mainly used by buyers with formal procurement processes, most often larger companies. As a freelancer or small business, you’re more likely to receive one than to issue one.

What happens if I invoice a company without referencing their PO number?

Many companies’ accounts payable systems will reject or hold the invoice until it references a valid, matching PO number — always check whether a client uses PO numbers before invoicing them for the first time.

Is a purchase order the same as a contract?

Not exactly, though it often functions similarly — a PO is generally considered a binding commitment to purchase once accepted, but it’s typically narrower and more transactional than a full contract.

Can a purchase order amount differ from the final invoice?

It shouldn’t without explanation — if the final invoice differs from the PO amount, it will likely get flagged during the buyer’s matching process, so any difference needs to be communicated and approved before invoicing.

Put this into practice with a real invoice.

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