Difference Wiki

Purchase Order vs. Invoice: What's the Difference?

Edited by Huma Saeed || By Sumera Saeed || Updated on October 19, 2023
A purchase order is a buyer's official request to a seller for goods or services, while an invoice is the seller's bill for those goods or services after they've been delivered or performed.

Key Differences

A purchase order is a document issued by a buyer to a seller, indicating the types, quantities, and agreed prices for products or services. An invoice, on the other hand, is a document issued by the seller to the buyer, listing the goods or services provided and stating the amount due.
Sumera Saeed
Oct 19, 2023
The main objective of a purchase order is to provide clear communication and specifics to the seller about what the buyer wants. The invoice serves as a demand for payment, confirming the sale and indicating the amount the buyer owes.
Sumera Saeed
Oct 19, 2023
From a transaction flow perspective, the purchase order typically comes before the delivery of goods or services, while the invoice is presented after the delivery. Essentially, a purchase order sets the expectations for the transaction, and the invoice confirms that those expectations were met.
Sumera Saeed
Oct 19, 2023
In terms of legal implications, a purchase order is a formal offer to buy and can become a binding contract once accepted by the seller. An invoice, in contrast, is a record of the sale and is used as a basis for payment.
Aimie Carlson
Oct 19, 2023
While both documents contain details about items, quantity, and price, a purchase order might also include delivery dates, payment terms, and other conditions. An invoice will typically have payment terms, due dates, and information related to discounts or late fees.
Sara Rehman
Oct 19, 2023
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Comparison Chart

Purpose

To request specific goods or services.
To bill for goods or services provided.
Sumera Saeed
Oct 19, 2023

Timing

Issued before receiving goods/services.
Issued after delivering goods/services.
Sumera Saeed
Oct 19, 2023

Issued By

Buyer or client.
Seller or service provider.
Sumera Saeed
Oct 19, 2023

Binding Nature

Can become a binding contract when accepted.
A record of the sale, basis for payment.
Harlon Moss
Oct 19, 2023

Contains

Delivery details, payment terms, conditions.
Payment terms, due dates, discounts, late fees.
Sumera Saeed
Oct 19, 2023
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Purchase Order and Invoice Definitions

Purchase Order

A document from a buyer requesting specific goods or services from a seller.
We sent a purchase order for 100 units of the new model to the manufacturer.
Huma Saeed
Oct 19, 2023

Invoice

A document requesting payment for goods or services provided.
We received an invoice from the contractor for the completed renovation work.
Huma Saeed
Oct 19, 2023

Purchase Order

A buyer's official commitment to buy certain products or services.
After negotiations, the company finalized the purchase order with the supplier.
Sumera Saeed
Oct 19, 2023

Invoice

A record of a transaction or sale, detailing the amount due.
The monthly invoice included all the transactions and charges.
Sumera Saeed
Oct 19, 2023

Purchase Order

A written authorization for a supplier to deliver specific goods at specified prices.
The purchase order detailed the exact specifications of the machinery.
Sumera Saeed
Oct 19, 2023

Invoice

A tool used by businesses to track sales, revenue, and accounts receivable.
Proper invoicing helps businesses manage their cash flow effectively.
Harlon Moss
Oct 19, 2023

Purchase Order

A formal offer from a buyer to a seller to acquire certain goods or services.
The vendor won't ship the items without a confirmed purchase order.
Sumera Saeed
Oct 19, 2023

Invoice

A seller's official bill presented to a buyer for payment.
Please check the details on this invoice before processing the payment.
Sumera Saeed
Oct 19, 2023

Purchase Order

A tool used by businesses to control and track their purchasing activities.
The finance team uses purchase orders to monitor and manage expenses.
Sara Rehman
Oct 19, 2023

Invoice

A statement listing delivered goods or performed services and indicating the sum owed for these.
The client disputed a charge on the invoice, so we're reviewing it.
Aimie Carlson
Oct 19, 2023

Invoice

A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill.
Sumera Saeed
Mar 03, 2017

Invoice

The goods or services itemized in an invoice.
Sumera Saeed
Mar 03, 2017

FAQs

Is a purchase order legally binding?

A purchase order can become a legally binding contract once accepted by the seller.
Sumera Saeed
Oct 19, 2023

When is an invoice typically sent?

An invoice is typically sent after goods have been delivered or services have been performed.
Janet White
Oct 19, 2023

What is a purchase order?

A purchase order is a buyer's official request to a seller for specific goods or services at specified prices.
Sumera Saeed
Oct 19, 2023

What's the main purpose of an invoice?

The main purpose of an invoice is to bill the buyer and detail the amount due for goods or services provided.
Sumera Saeed
Oct 19, 2023

Who issues the invoice?

The invoice is issued by the seller or service provider to the buyer or client.
Sumera Saeed
Oct 19, 2023

Can a purchase order be used as an invoice?

While they contain similar information, a purchase order is not an invoice. They serve different purposes in the transaction process.
Sumera Saeed
Oct 19, 2023

What is an invoice?

An invoice is a bill presented by the seller to the buyer for goods or services provided.
Huma Saeed
Oct 19, 2023

Can a purchase order be changed after it's issued?

Changes can often be made, but they typically require agreement from both the buyer and seller.
Janet White
Oct 19, 2023

Is a purchase order needed for every transaction?

Not necessarily. Some businesses might require it for larger transactions, while others may use them routinely.
Harlon Moss
Oct 19, 2023

Why is an invoice important for businesses?

An invoice serves as a record of sale, basis for payment, and helps in tracking revenue and accounts receivable.
Sumera Saeed
Oct 19, 2023

When is payment typically due after receiving an invoice?

Payment terms vary but are often stipulated on the invoice, such as "net 30 days."
Sumera Saeed
Oct 19, 2023

What happens if there's a discrepancy between a purchase order and an invoice?

Discrepancies should be resolved between the buyer and seller, often involving checks against agreements and delivered goods/services.
Sara Rehman
Oct 19, 2023

Do all businesses use purchase orders?

Not all, but many businesses use purchase orders to control and monitor their purchasing activities.
Sumera Saeed
Oct 19, 2023

Can a purchase order be canceled?

Depending on the terms, a purchase order can often be canceled before the goods are shipped or services are provided.
Janet White
Oct 19, 2023

What details are typically on a purchase order?

A purchase order often includes item details, quantity, price, delivery dates, payment terms, and other conditions.
Sara Rehman
Oct 19, 2023

Is an invoice a proof of payment?

No, an invoice is a request for payment. A receipt or payment confirmation is proof of payment.
Sumera Saeed
Oct 19, 2023

What happens if an invoice isn't paid on time?

Late invoices may incur fees or interest charges, depending on the terms set by the seller.
Aimie Carlson
Oct 19, 2023

How do businesses manage purchase orders and invoices effectively?

Many businesses use software or systems to track, manage, and reconcile purchase orders and invoices to ensure smooth operations and accurate financial records.
Aimie Carlson
Oct 19, 2023

What's the link between a purchase order and an invoice?

A purchase order sets transaction expectations, while an invoice confirms those expectations were met and demands payment.
Aimie Carlson
Oct 19, 2023

Do purchase orders specify delivery dates?

Many purchase orders include delivery dates to clarify when goods or services are expected.
Sara Rehman
Oct 19, 2023
About Author
Written by
Sumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.
Edited by
Huma Saeed
Huma is a renowned researcher acclaimed for her innovative work in Difference Wiki. Her dedication has led to key breakthroughs, establishing her prominence in academia. Her contributions continually inspire and guide her field.

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