In a purchase order vs invoice comparison, the buyer sends the purchase order before the purchase, while the seller sends the invoice at the agreed billing event. Both may list the same items and prices, but the PO records what the buyer authorized and the invoice records what the seller says is due.
For example, PO-104 can approve 12 units at $75, or $900 before tax. The supplier's invoice INV-208 should reference PO-104 and show the 12 units actually supplied, the same $75 unit price, applicable tax, and the payment due date. Matching those fields helps detect unauthorized buying, duplicate payment, and price or quantity errors.
Purchase order vs invoice
What is the difference between a purchase order and an invoice?
The documents may show the same items, but the buyer and seller use them at different stages of the transaction.
| Question | Purchase order | Invoice |
|---|---|---|
| Who sends it? | The buyer sends it to the supplier. | The seller sends it to the buyer. |
| When is it used? | Before work, shipment or purchasing commitment. | After delivery, a milestone or another agreed billing event. |
| What is its purpose? | Authorize and define a planned purchase. | Request payment for goods or services supplied. |
| What is matched? | Approved supplier, items, quantities, prices and delivery terms. | Actual items, tax, totals and PO or receipt references. |
| Does it prove payment? | No. | No. A receipt or payment record confirms payment. |
Who sends a purchase order and who sends an invoice?
The buyer creates and approves a purchase order, then sends it to the supplier. It identifies the supplier, requested goods or services, quantities, prices, delivery, and terms. It may draw against a department or project budget.
The supplier creates an invoice for the buyer after the agreed billing event. It identifies the transaction, amount due, tax, payment terms, and payment instructions. The supplier should reference the buyer’s PO when required.
- Purchase order: the buyer sends it to the supplier
- Invoice: the seller sends it to the buyer
- PO controls authorization
- Invoice requests payment
When does each document appear?
A PO normally appears before goods are shipped or services begin. It gives the supplier evidence of an approved order. Changes should be documented with a revised PO or accepted change process.
An invoice appears after delivery, completion, a recurring period, or an agreed milestone. Deposits and advances may be invoiced earlier when the contract permits. Timing should follow the commercial agreement.
- Purchase order: before commitment, work or delivery
- Receipt or service approval after delivery
- Invoice at the agreed billing event
- Payment after matching and approval
How do purchase orders and invoices get matched?
Two-way matching compares the invoice with the PO. Three-way matching also uses evidence that goods were received or services approved. The reviewer checks supplier, item, quantity, price, tax, freight, total, and references.
Differences may be legitimate, such as an approved change or partial delivery, but they should be documented. A supplier should not change the PO; the buyer controls its own authorization record.
- Match the supplier and purchase-order reference first
- Quantity and price match
- Receipt or approval match
- Documented tolerance or exception
How should you connect the records?
Use distinct PO and invoice numbers. Store the approved order, revisions, receipt, invoice, payment, and correspondence together or connect them through references. This creates a traceable purchase-to-payment record.
Not every small purchase needs a formal PO, but businesses should define when one is required. Suppliers should ask new business clients about PO requirements before beginning work to avoid a preventable invoice rejection.
- Keep separate controlled purchase-order and invoice number sequences
- Required PO threshold or policy
- Invoice references the accepted PO
- Linked order, receipt, invoice, and payment
Official sources
These references support the regulatory information in this guide. Check the current page before making a decision.
- Federal Acquisition Regulation 13.302-1: Purchase OrdersStates that purchase orders specify the quantity or scope ordered, delivery timing, and inspection arrangements.
- Federal Acquisition Regulation 32.905: Invoice DocumentationLists invoice documentation elements used to establish a proper payment request under federal contracts.
Frequently asked questions
Questions about purchase order vs invoice: key differences
Can an invoice be issued without a purchase order?
Yes, unless the buyer or contract requires a PO. Suppliers should confirm the client’s process before delivering work.
Does a purchase order mean payment has occurred?
No. It authorizes a planned purchase. Payment usually follows delivery, invoice, review, and approval.
What if the invoice exceeds the PO?
Pause and resolve the difference. The buyer may need an approved PO change, and the supplier should provide evidence for authorized additions.