Purchase Order vs Invoice (and Receipt): What's the Difference?

Updated October 4, 2026 · General information, not legal or tax advice.

A purchase order (PO) is sent by the buyer to say "we want to buy this, at this price". An invoice is sent by the seller to say "you owe us this amount". A receipt confirms the money was paid. They are three different documents from different sides of the same sale, and confusing them is one of the most common reasons business invoices get stuck in accounts payable.

Purchase order vs invoice vs receipt at a glance

What a purchase order is

A purchase order is the buyer's formal, numbered order. Companies use POs to control spending: someone with budget authority approves the PO before the supplier starts. Once the supplier accepts it (explicitly, or by delivering), the PO generally forms part of the contract on its stated terms.

A PO usually contains the PO number and date, buyer and supplier details, item descriptions, quantities and agreed prices, delivery address and date, payment terms (often Net 30 or longer), and the buyer's standard terms and conditions.

What an invoice is

An invoice is the seller's request for payment for goods or services supplied under that order. It must have its own invoice number from the seller's sequence, and for PO-based customers it must quote the PO number exactly. See how to write an invoice for the full list of fields.

How they fit together: the three-way match

Larger buyers check three documents before paying: the purchase order (what was ordered), the goods receipt or delivery note (what actually arrived) and the invoice (what is being charged). If quantities or prices don't match, or the invoice has no PO number, the invoice is put on hold. To avoid that:

• Put the PO number on the invoice, in the header and in the email subject.
• Use the same item descriptions, quantities and unit prices as the PO.
• Invoice partial deliveries separately, each referencing the PO and the delivery.
• If the price changed, ask the buyer to amend the PO before you invoice.
• Send the invoice to the accounts-payable address or portal the buyer specifies.

Related documents

Purchase requisition (or "indent")

An internal request inside the buyer's organisation asking for something to be bought. In India and some other countries this is often called an indent. Once approved, the purchasing team turns it into a purchase order to the supplier. A requisition is never sent to the supplier as an order.

Request for quotation (RFQ) and quote

To find out what something will cost without committing to buy, the buyer sends a request for quotation and the supplier replies with a quote or estimate. A purchase order is the wrong tool for getting a price, because it signals a commitment to buy.

Blanket purchase order

A PO covering repeated purchases over a period up to a spending limit. Each invoice references the same blanket PO number, sometimes with a release number.

Pro forma invoice

A preliminary invoice sent before delivery, often for customs or so the buyer can arrange prepayment. It is not a demand for payment and does not replace the final invoice.

Common questions

Is a purchase order the same as a receipt?

No. A PO is created before the purchase to authorise it; a receipt is created after payment to prove it. A "goods receipt" (or receiving report) is something else again: the buyer's internal record that the ordered goods arrived.

Is a PO legally binding?

Once the seller accepts it, a PO is usually part of a binding contract. Before acceptance it is an offer to buy. The exact position depends on the terms and the law that applies.

Can I invoice without a PO?

For small clients, yes. For companies that use POs, an invoice without one will usually be rejected or delayed. Ask "Do you need a PO for this?" before starting work.

Which comes first, the PO or the invoice?

The PO. The usual order is quote → purchase order → delivery → invoice → payment → receipt.

Frequently asked questions