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Both, a purchase order and an invoice are important business documents for business transactions. Although they are quite similar, they have a few differences which must be understood clearly.
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Introduction • Both, a purchase order and an invoice are important business documents for business transactions. • Although they are quite similar, they have a few differences which must be understood clearly.
Purchase Order • Purchase order is a document indicating types, quantity of products and services being sold. • It details the items the buyer agrees to purchase for a certain price. • It also includes the payment terms, shipment, other associated terms and conditions. • The customer sometimes creates a standing PO. • The standing or blanket PO allows a company to order the same product multiple times using the same PO number over an extended purchase period.
Purpose & Importance of a PO • Purchase orders are typically used when a buyer wants to purchase supplies or inventory on account. • It is important as you and your team have instant visibility of incoming stock; how much is coming and when is it due to turn up. • A properly managed purchase order system will quickly tell you what’s been ordered, shipped and received but not invoiced and so on. • Besides that, creating POs in the system will help prevent ordering more of an item than you may need. • You can also match the delivered goods against what was ordered, to prevent wrong delivery. • Suppliers use PO’s to fulfil their orders and payment processing. An online invoicing software makes it easy to send purchase orders to vendors online, in pre-designed • templates.
Invoice • Invoice is a document issued by a seller to a buyer indicating items sold, prices, date of shipment, delivery and payment terms. • It is also called as a “bill”, “statement” or “sales invoice”. • The term invoice indicates money the buyer owes to a seller. • The invoice is also specified with the period of time after which the buyer has to make payment to the seller for the goods and services they have purchased. • Modern-day invoices are transmitted online.
Importance of an Invoice • Invoice is a document issued by a seller to a buyer indicating items sold, prices, date of shipment, delivery and payment terms. • It is also called as a “bill”, “statement” or “sales invoice”. • The term invoice indicates money the buyer owes to a seller. • The invoice is also specified with the period of time after which the buyer has to make payment to the seller for the goods and services they have purchased. • Modern-day invoices are transmitted online.
Key Differences • The purchase order is what the buyer prepares, while the invoice is what the seller makes in lieu of the payment to be received. • The purchase order lists the quantity and the due date of delivery of goods, products or services purchased/ordered by the buyer, while an invoice has, on it the price of the goods, products or services being sold along with term and conditions and due date. • Both, purchase order and invoice have the same details except the technical mention for records viz.a.viz the shipping details, invoice number and purchase order number which is additional on the invoice.
