Terminology » Other Wireless » Purchase Order vs. Invoice: Key Differences Explained

Purchase Order vs. Invoice: Key Differences Explained

business purchase order invoice transaction

Let’s break down the difference between a Purchase Order (PO) and an Invoice. These are two crucial documents in any business transaction, but they serve distinct purposes.

Purchase OrderInvoice
This is a document issued by the Buyer to the Seller.This is a document issued by the Seller to the Buyer.
The document lists out the goods or services required by the Buyer from the supplier.The document details the payments owed by the buyer to the supplier based on goods sold or services provided.
The PO is generated before the invoice is sent to the buyer.The invoice is generated after a PO has been placed and items have been delivered/supplied.
It defines the initial contract of sale.It marks the confirmation of the sale.
Prepared by the Buyer.Prepared by the Seller so that they can receive payment.

Essentially, the Purchase Order is the request, and the Invoice is the bill. The PO comes first, outlining what the buyer wants to purchase. Once the goods or services are provided, the seller sends an invoice to the buyer, requesting payment for what was delivered as per the agreed-upon Purchase Order.