A purchase order (PO) is a document a buyer sends a supplier to confirm exactly what they're ordering, at what price. It protects both sides and keeps your purchasing organized. Here's how to create one.
PO vs. invoice — what's the difference?
A purchase order is sent by the buyer to request goods before they're delivered. An invoice is sent by the seller to request payment after. The PO comes first.
What to include on a purchase order
- A unique PO number
- Your business name and the supplier's
- Order date and expected delivery date
- Line items: description, quantity, unit price, total
- Subtotal, tax, shipping, and grand total
- Payment terms and shipping address
How to create one, step by step
- Assign a PO number (sequential, e.g., PO-1001).
- Fill in your details and the supplier's.
- List each item with quantity and agreed price.
- Add tax, shipping, and terms.
- Send it to the supplier and keep a copy.
Why PO numbers matter
A consistent numbering system lets you match the PO to the delivery and the invoice later (a “3-way match”), so you never pay for something you didn't receive.
The easy way to raise and track POs
Our Purchase Order & Vendor Tracker gives you a branded, printable PO plus a log of every order, a supplier database, receiving with a 3-way match, and a payment log — in Google Sheets or Excel.
Frequently asked questions
Is a purchase order legally binding? Once a supplier accepts it, a PO generally becomes a binding contract for that order.
Do small businesses need purchase orders? They help any business that buys from suppliers regularly — they prevent errors and overpayments.
What's a 3-way match? Matching the PO, the goods received, and the invoice before paying — so quantities and prices all line up.
Browse our small business spreadsheets.