What’s the difference between Purchase Order and Invoice?

difference between purchase order and invoice

This ensures that there are no inconsistencies between the original purchase order and the PO invoice. If you have a streamlined vendor billing process, you can save a lot of time during invoice processing and avoid erroneous and wrong payments. • Lets the vendors be professional while collecting the invoice payments.

But CoreIntegrator Enterprise for enterprise-sized companies as well as A/P One AP automation for small and medium sized companies provide automated PO matching. Our systems can use OCR technology to automatically compare the three critical PO documents and highlight any discrepancies bookkeeping for startups between them. So the key to automating PO invoice processing is all about PO matching. It also allows for faster delivery since POs help vendors schedule production and/or delivery when the buyer needs it. Or it schedules the necessary resources to provide the ordered services.

Why Companies Utilize Purchase Orders

It’s important to note that a purchase order and an invoice are not interchangeable documents. A purchase order is issued before the goods or services are delivered, while an invoice is issued after the goods or services are delivered. Additionally, a purchase order serves as a request for goods or services, while an invoice is a payment request. As a small business owner, invoicing is essential to managing your finances. A purchase order (PO) is sent by a buyer to a vendor that serves as an official request to buy x product for x amount.

difference between purchase order and invoice

Unlike PO, invoices are generally in use everywhere to complete vendor payments. • Paints a clear picture of how much budget you have, how many vendors orders your company places, and vendor payments processed. The purchase department of the buyer prepares the official PO request. Maintaining records of purchase orders can also help businesses once tax season rolls around. When auditors look for financial discrepancies, having purchase orders on hand can alleviate any concerns. Of course, they can also help settle other disputes, such as a customer who refuses to pay for something, arguing they never ordered it in the first place.


The information on a PO often includes the list of items that a buyer would like to purchase, quantities for each item, and agreed-upon prices. The best way to achieve this is through digital procurement software. Additionally, printing and mailing paper can be hard to manage while ensuring that nothing gets lost or destroyed. As mentioned earlier, invoices are the standard for requesting business-to-business payments, which is the main reason companies use them. The benefits above are geared toward purchasers, but POs are also important documents for vendors—who use them for order fulfillment and payment processing.

What is a non-PO invoice?

A Non-PO Invoice is an online tool in ARIBA used to make a payment to a supplier when a PO is not required and the invoice is under the Direct Buy Limit.

The purchase order initiates the transaction and is followed by the invoice once goods or services are rendered to the customer’s satisfaction. If you are fortunate enough to own a fast-paced, thriving business, you know the importance of a paper trail. The accountability factor is not something to neglect, and having these documents on hand greatly supports that factor. Conflicts and miscommunications are inevitable, and whether you store your POs and invoices physically or digitally, you’ll be happy you have them when questions arise. Once approved, as with PO invoices, we automatically push non-PO invoices to an ERP or accounting system for payment. Once all the necessary approvals have been obtained, the invoice comes back to accounts payable for final booking and payment.

Procurement Negotiation: 35 Pro Tips and Easy Mistakes to Avoid

AP automation solutions like CoreIntegrator Enterprise and A/P One cloud based subscription service makes invoice approvals simple for approvers. Clerks staple invoices to approval cover sheets and pass them around the office. Typically, the AP team will apply the appropriate accounting codes to non-PO invoices and identify the invoice approver(s) based on the information on the invoice to the best of their knowledge. Business/travel related expenses and conference fees with proper substantiation also require a different approach to payments or reimbursements. Payment for goods, supplies, or equipment under a certain dollar limit, for example, make for poor candidates for PO purchasing.

difference between purchase order and invoice

Leave a comment