FINANCE & DOCUMENTS

Purchase Order vs. Invoice: What's the Difference and When to Use Each

They both list items and prices. Only one of them is a request for payment.

Looking for the other documents in the chain? The business documents hub compares every pair that gets confused (quote vs invoice, proforma vs invoice, delivery note vs invoice, invoice vs credit note) and has a checklist of required fields for each one.

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Same-Looking Documents, Opposite Direction

A purchase order and an invoice can look almost identical - both list items, quantities, prices, and a total. The confusion is understandable. But they travel in opposite directions and mean opposite things:

  • A purchase order (PO) is sent by the buyer, to the vendor, before the order is fulfilled. It says: "here's what we want to buy, at this price, please confirm."
  • An invoice is sent by the seller, to the buyer, after the goods or work are delivered. It says: "here's what was delivered, please pay this amount."

One authorizes a purchase before it happens. The other requests payment after it happens. Mixing them up is why "did we actually approve this?" arguments happen at the accounts payable desk.

A Typical Order of Events

  1. Buyer sends a Purchase Order listing what they want, quantities, and agreed price.
  2. Vendor confirms and fulfills the order - ships the goods or completes the work.
  3. Vendor sends an Invoice for what was actually delivered, often referencing the original PO number.
  4. Buyer checks the invoice against the PO (and what actually arrived) before paying - this three-way match is the whole reason POs exist.

Do You Actually Need Purchase Orders?

For a one-off buy from a supplier you already trust, an invoice on its own is usually fine - a PO adds a step without adding much protection. Purchase orders start earning their keep once:

  • You're ordering repeatedly from the same vendors and want a consistent paper trail
  • More than one person can approve spending, and you need a record of who authorized what
  • You want to catch discrepancies - an invoice that doesn't match what was actually ordered - before paying it
  • You need visibility into committed spending before the bill even arrives

Both Documents, No Extra Software

Send vendors a proper Purchase Order before the work starts, and use the free Invoice Maker on the selling side - both export clean, professional PDFs with no account required.

Frequently Asked Questions

What is the difference between a purchase order and an invoice?

A purchase order is sent by the buyer to a vendor before the order is fulfilled, confirming what's being bought and at what price. An invoice is sent by the seller after the goods or services are delivered, requesting payment. A PO comes first and authorizes the purchase; an invoice comes after and requests payment for it.

Do small businesses need to use purchase orders?

Not always - for a one-off purchase from a known supplier, an invoice alone is often enough. Purchase orders earn their keep once you're ordering repeatedly from the same vendors, want a paper trail matching what was ordered to what was actually delivered and billed, or need to track committed spending before the bill arrives.

Who creates the purchase order, the buyer or the seller?

The buyer creates and sends the purchase order to the vendor. The vendor (seller) then creates and sends the invoice once the order has been fulfilled, referencing the PO number if one was used.