Purchase Order vs Invoice —

7 Key Differences

Purchase orders and invoices may be hard to differentiate, especially if you are new in the procurement industry. 

For this article, we will help you know the difference between a purchase order and an invoice. But first, we will tell you the definition and importance of both terms in the field of procurement. 

Once you have finished reading this article, you will be able to differentiate the two terms which will help you in your journey in the industry. So without further ado, let us now start!

What is a Purchase Order? 

A purchase order is a request or form detailing a company or organization’s intention to buy or procure products or services. 

The order can be in the form of a written request or through a digital form submitted to a supplier. The purchase order is written in great detail and should follow a process that is defined by the company’s procurement team. 

This is important because, as mentioned earlier, any delays in the purchasing order are disastrous for a company.

If your company depends on the daily procurement of materials or services, any delay will cause interruptions in the daily operations of your company or organization. 

For example, a printing company that is unable to buy printing materials because there are delays with the purchase order will have its operations hampered until the supplies are bought immediately.

The Purpose ofa Purchase Order

Purchase orders provide clarity and accuracy in business transactions. A purchase order clearly specifies the details of the purchase, such as the quantity, description, and price, ensuring there are no misunderstandings between the buyer and the seller.

Also, purchase orders play a crucial role in budget control. By requiring a purchase order, businesses can enforce a pre-approval process, ensuring that purchases align with their budgetary guidelines. This helps prevent unauthorized or unplanned spending, allowing for better financial management.

Furthermore, purchase orders contribute to efficient inventory management. They provide a clear record of the items to be received, allowing businesses to track their inventory accurately. This helps in planning and prevents situations like running out of stock or overstocking, optimizing the supply chain management process.