Invoice is different from a purchase order. Every business must maintain a proper documentation system as any delay may lead to fines and penalties. They should have a repository of documents so that any document can be retrieved as and when needed.
A purchase order (PO) is a document the buyer uses to place an order mentioning the goods required, delivery date, price and other terms and conditions. Once the vendor accepts a PO, it becomes a legally binding document that specifies the type of goods, price, delivery date and payment terms.
Benefits of using purchase orders
An invoice is created by the vendor for goods sold. It reflects the type of goods sold and the amount due from the buyer, and the due date of payment. Below is a sample tax invoice:
Benefits of using invoices
|Creation||It is created by the purchaser of goods.||It is created by the vendor.|
|Contents||It contains client expectations such as the nature of product, quantity and price, and other terms of procurement.||It contains details of products sold, quantity and rate as approved in the purchase order, tax, approved purchase order number, etc.|
|Purpose||The purchaser sends a purchase order to the vendor to place an order for goods/services.||The vendor sends an invoice to the purchaser to request payment for the order placed.|