When to use a purchase order
Use a PO when you are the buyer and you want the order, price and delivery terms in writing before the supplier acts. They matter most for repeat orders, purchases on account and anything that needs approval. For a one-off small purchase, a PO is paperwork for its own sake.
PO vs invoice
The buyer sends a purchase order; the seller sends an invoice. The PO number on the invoice lets accounts payable match the order, the delivery note and the bill. If your supplier does not put the PO number on their invoice, ask them to.
Approval and numbering
Use a sequence that includes the year, such as PO-2026-014, and keep a log. Put the approver’s name on the document. A PO without an authorized signature is a suggestion; a signed one is an instruction the supplier can rely on.
Delivery terms
Write down who pays freight, where the goods are handed over and when. “FOB destination” means the seller carries the risk until delivery; “FOB origin” passes it earlier. If partial delivery is acceptable, say so.