Purchase Order vs Invoice: What Changes and When

A purchase order records the buyer's order to the supplier. An invoice is the supplier's request for a billable amount. They describe different steps and travel in opposite directions: buyer to supplier, then supplier to buyer. Keep the buyer's PO reference separate from the supplier's invoice number.

Where the customer requires its PO reference, include it on the related delivery or work record and invoice alongside your own invoice number. Compare what was ordered, received or completed, 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.	When an amount becomes billable under the agreement, including an agreed deposit or milestone.
What is its job?	To say what the buyer wants, at what quantity, price and terms.	To request the amount currently billable under the agreement.
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.
Payment status	Not proof of payment.	A payment request, not proof that payment was received.

The document chain: approval, delivery, billing

In this illustrative workflow, the buyer issues PO 4507. The supplier keeps that reference with the delivery or service record and invoice INV-203. Compare the authorized scope, what was received or completed, and what is now billable.

This is a manual checking procedure, not a claim that Invosmith automatically performs three-way matching. Keep the buyer's PO reference and supplier's invoice number distinct.

Worked match: when the quantities do not agree

Illustrative figures excluding tax and fees: PO 4507 lists 40 filters at $12, totaling $480. The delivery record shows 32 received and 8 outstanding. If the agreement bills received units, the current invoice is $384 and $96 relates to the remaining 8 units. If the agreement uses another billing milestone, check that arrangement rather than applying this example automatically.

Before sending or paying, compare the PO reference and separate invoice reference; item description and unit; ordered and received quantity; unit price and approved changes; currently billable amount and tax; and earlier billed or paid amounts. Ask the buyer or supplier about missing or disputed information.

What a supplier should do when the PO number is missing

Ask whether this customer requires a PO, who issues it and where it belongs on the invoice. Do not guess a reference. Confirm any exception with the buyer.

North Tyneside Council's No PO, No Pay policy is a specific example: it asks for both invoice number and PO number and says PO and invoice information must match within agreed tolerances. It also lists exceptions. These are the council's instructions, not a rule for every business.

When you don't need both documents

Check the authorization and billing process for the actual purchase. A quote, contract or work order does not waive a separate PO requirement when the buyer has one. This guide does not decide whether a missing reference removes a payment obligation or whether a particular contract is enforceable.

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.