Purchase Order vs Invoice: What Changes and When

A purchase order is created by a buyer before goods or services are supplied. An invoice is created by a seller after a billable event and requests payment. They can describe the same transaction, but they travel in the same direction neither at the same time nor for the same purpose.

For a supplier or contractor, the practical rule is simple: keep the customer’s PO number on the delivery or work record and on the invoice so their accounts team can match what was approved, received and billed.

Purchase order vs invoice at a glance

The purchase order records what the buyer authorized. The invoice records what the seller is billing. A PO number links them, but it does not replace the seller’s invoice number.

Question	Purchase order (PO)	Invoice
Who creates it?	The buyer, for the seller.	The seller, for the buyer.
When?	Before goods ship or work starts, when the buyer is placing or approving the order.	After goods, services or an agreed billing milestone, when payment is being requested.
What is its job?	To say what the buyer wants, at what quantity, price and terms.	To say what the seller supplied and what is now due.
Primary reference	The buyer's PO number.	The seller's invoice number; it quotes the customer's PO number when one exists.
Typical next action	Supply, schedule or confirm the order.	Review and pay, or raise a specific query.

The document chain: approval, delivery, billing

For a formal purchase, the buyer issues PO 4507. The seller carries PO 4507 onto the delivery note, service record or other evidence of what was supplied, then quotes it again on invoice INV-203. The PO says what was approved; the work or delivery record says what happened; the invoice says what is now requested for payment.

This comparison is often called a three-way match. It is a checking method, not a new document: approved PO, received goods or completed work, and invoice lines are compared before payment.

Worked match: when the quantities do not agree

PO 4507 approves 40 filters at $12 each. The delivery record shows that 32 arrived and 8 remain outstanding. The supplier should invoice the 32 delivered units when that matches the agreement, keep the remaining 8 open, and retain the same PO reference. An invoice for all 40 would not match the receiving record and should be corrected or explained before payment.

For services, replace delivered quantity with completed scope or approved milestone. The same principle applies: bill what the agreement says is currently billable and keep the evidence linked.

What a supplier should do when the PO number is missing

First ask whether the customer requires a PO for this purchase and where the reference should appear. If they do, obtain or confirm the correct number through the buyer’s process and update the invoice rather than guessing. If the customer does not use POs, rely on the accepted quote, contract, work order or other authorization that actually governed the job.

A missing PO does not have one universal legal or accounting effect. It is usually a workflow problem whose answer depends on the buyer’s process and the underlying agreement.

When you don't need both documents

A small counter sale may need only a receipt or invoice. A service client may approve a quote or work order instead of issuing a PO. Do not create a purchase order merely to make the file look formal; use it when the buyer’s procurement process actually requires one. An invoice still belongs only after a billable event, not while the purchase is only being requested.

Frequently asked questions

Who sends the purchase order and who sends the invoice?

The buyer sends the purchase order to authorize or request the purchase. The seller sends the invoice to request payment for supplied goods, services or an agreed billing stage.

Should the PO number appear on the invoice?

Include it when the customer issued one or requires it for matching. Keep the seller’s own invoice number as well; the two references identify different records.

Can I send an invoice if the customer did not issue a PO?

That depends on the buyer’s process and the authorization for the purchase. Check whether an accepted quote, contract, work order or direct instruction supports the bill, and ask the customer before inventing a PO reference.

What happens with a partial delivery?

Record what was delivered and what remains outstanding. Invoice only the amount currently billable under the agreement, and keep the original PO number on each related record.

Does a purchase order automatically become a contract?

Its effect depends on its wording, acceptance, the surrounding agreement and applicable law. Treat it as an important authorization record, not as a universal legal guarantee.