Understand how purchase orders and invoices work together from approval through payment.
The purchase order
A buyer issues a purchase order to authorize a defined purchase under its process. It commonly states supplier, items, quantity, price, delivery and billing instructions. Whether it forms a contract depends on the surrounding terms and acceptance.
The invoice
The supplier issues an invoice to bill for the goods or services supplied. It should reference the purchase order when the customer requires one. The invoice must reflect the actual supply and any applicable tax requirements.
Three-way matching
Many finance teams compare the purchase order, receipt or delivery evidence, and invoice before payment. Differences in quantity, price or tax are routed for approval instead of being silently changed.
Frequently asked questions
Can a supplier create the customer purchase order?
The buyer normally controls its own purchase authorization, though a supplier may provide quote data that the buyer uses.
Why was my invoice rejected without a PO?
The customer may require an approved PO before its accounts-payable system can process the invoice.
Last reviewed 22 June 2026. This guide provides general information, not tax, legal or financial advice.
Reviewed for clarity and source accuracy by Toolnovax Editorial Team, business operations and automation specialists.