Updated on: Oct 12th, 2021
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5 min read
Purchase Order or PO, as the name itself suggests, is a formal intent by the buyer to the seller for the purpose of procurement of goods and services. It is not a legal contract but serves as a commercially binding document between the two parties.
A purchase order usually has following fields:
A purchase order provides clear and detailed written information regarding the goods/services required by the buyer to avoid any chances of error in the supply. Upon issuance of the purchase order, the same needs to be accepted by the seller.
When the goods are ready to be dispatched, the seller issues the sales invoice to the buyer. Both the purchase order and the invoice contains almost similar details. The buyer makes the payment for the goods as per the payment terms mentioned in the purchase order.
A Purchase Order (PO) is a formal request by a buyer to a seller for the procurement of goods and services, serving as a binding document with specified details. It includes fields like entity names, item descriptions, quantities, rates, shipping locations, payment terms, and more. It ensures accuracy in supply and needs seller acceptance before goods are dispatched, followed by payment. The document's purpose is to avoid errors in transactions.