Purchase Order vs Invoice: What's the Difference? (With Examples)
The complete guide to the difference between a purchase order and an invoice - who sends each, when, and what they mean for payment
Purchase Order vs Invoice: The Core Difference
The core difference: a purchase order (PO) is sent by the buyer before goods are delivered, to place an order. An invoice is sent by the supplier after delivery, to request payment. The PO says 'here is what I want'; the invoice says 'here is what you owe.' Both documents share a similar line-item format but serve different stages of the same transaction.
Purchase Order vs Invoice at a Glance
| Dimension | Purchase Order (PO) | Invoice |
|---|---|---|
| Who sends it | The buyer | The supplier |
| When | Before delivery (to place the order) | After delivery (to request payment) |
| Purpose | Confirm what's being ordered, at what price | Request payment for what was delivered |
| Legally binding | Yes, once the supplier accepts | Yes, once issued |
| Contains | Items, quantities, prices, delivery terms | Items delivered, amounts, taxes, payment terms |
| Reference number | PO number | Invoice number (references the PO number) |
| Triggers | The supplier to fulfill the order | The buyer to pay |
What Is a Purchase Order?
A purchase order is a commercial document a buyer sends to a supplier to confirm an order - items, quantities, agreed prices, delivery terms, and payment terms. Every PO carries a unique purchase order number. Once the supplier accepts the PO, it becomes a legally binding agreement. The PO is the output of an approved purchase requisition and the input to three-way matching when the invoice arrives.
What Is an Invoice?
An invoice is a commercial document a supplier sends to a buyer requesting payment for goods or services delivered. It references the original PO number, lists what was actually delivered (which may differ from what was ordered), shows the amount owed with taxes, and states the payment terms (e.g. Net 30). Accounts payable matches the invoice against the PO and the goods receipt before releasing payment.
Which Comes First - PO or Invoice?
The purchase order always comes first. The workflow is: requisition approval PO (sent to supplier) supplier delivers supplier issues invoice accounts payable matches PO + receipt + invoice payment released. The invoice is the last commercial document in the cycle; the PO is the first external commitment.
How PO and Invoice Connect: Three-Way Matching
Three-way matching is the accounts-payable process that connects the PO and the invoice (plus the goods receipt) before payment. It verifies that what was ordered (PO), what was received (receipt), and what is being billed (invoice) all agree - preventing overpayment, fraud, and payment for undelivered goods. The PO number on the invoice is the link that makes matching possible, which is why every PO needs a unique number.
Purchase Order vs Invoice vs Purchase Requisition
Three documents, three stages:
- Purchase requisition - internal request (we want to buy this), pre-approval
- Purchase order - external commitment sent to the supplier, post-approval
- Invoice - supplier's request for payment, post-delivery
The requisition is internal; the PO and invoice are external. The requisition and PO are buyer-side; the invoice is supplier-side.
Frequently Asked Questions
Is a purchase order the same as an invoice?
No. A purchase order is sent by the buyer before delivery to place an order. An invoice is sent by the supplier after delivery to request payment. The PO initiates the transaction; the invoice requests payment for it. They share a similar format but serve different stages.
Which comes first, the purchase order or the invoice?
The purchase order always comes first. The buyer sends the PO to place the order; the supplier fulfills it; the supplier then issues the invoice to request payment. The invoice references the PO number so accounts payable can match the two (plus the goods receipt) before paying.
What is the difference between a PO number and an invoice number?
A PO number is the unique identifier on a purchase order, issued by the buyer when the order is placed. An invoice number is the unique identifier on an invoice, issued by the supplier when billing. The invoice references the PO number so the two documents can be matched for payment. See purchase order number.
Can a purchase order be used as an invoice?
No. A purchase order is a request to deliver; an invoice is a request to pay. They are different documents for different directions of the transaction. A supplier cannot use the buyer's PO as their invoice - they must issue their own invoice referencing the PO number.
Why do accounts payable need both the PO and the invoice?
Accounts payable needs both (plus the goods receipt) to perform three-way matching - verifying that what was ordered, what was received, and what is being billed all agree before releasing payment. This prevents overpayment, fraud, and payment for goods never received. See three-way matching.
Do small businesses need both purchase orders and invoices?
For controlled, auditable procurement - yes. POs enforce spend control before the order is placed; invoices trigger payment after delivery. SMBs can create POs for free with the AuraVMS purchase order generator, then match invoices against them at payment time.