Purchase Order vs Invoice: What's the Difference?
A purchase order is issued by the buyer to a supplier before the purchase, authorising what to supply, at what price and on which terms. An invoice is issued by the supplier to request payment for goods or services supplied. They are complementary documents, not substitutes; accounts teams often match the invoice to the purchase order before paying.
In short, the purchase order comes from the buyer and says "please supply this". The invoice comes from the supplier and says "please pay for this". The rest of this guide explains each document, compares them side by side, and walks through a fictional example.
What is a purchase order?
A purchase order (PO) is the buyer's written authorisation to a supplier. It tells the supplier exactly what the buyer wants, how much, at what price, and on what terms.
A purchase order typically includes:
- The buyer's business name, plus billing and delivery (ship to) addresses
- The supplier's name and address
- A unique PO number and the order date
- Line items with description, quantity, unit and agreed price
- Payment terms, such as an advance or payment within a set number of days
- A delivery-by date and delivery terms
- Any other terms and notes
Buyers send a PO once they've decided to buy, often after comparing quotations. The PO number then becomes the reference both sides use. The supplier quotes it on delivery paperwork and on the invoice. Whether a PO forms a binding contract depends on its terms, how the supplier accepts it and the law that applies.
You can start one with the free purchase order template.
What is an invoice?
An invoice is the supplier's request for payment. It records what was supplied, what it costs and how to pay.
An invoice typically includes:
- The supplier's business name, address and logo
- The buyer's name and billing address
- A unique invoice number, the invoice date and a due date
- Line items with description, quantity, unit price and tax
- The total amount due, with the currency stated
- The buyer's purchase order number, when there is one
- Payment terms and bank details
What a tax invoice must show, and when it must be issued, depends on your country and tax status. For example, in India a GST tax invoice has specific requirements such as GSTIN and HSN or SAC codes. Elsewhere, VAT or sales tax rules apply. Check your local rules.
Try the free invoice template or the invoice generator.
Purchase order vs invoice: side-by-side comparison
| Point | Purchase order | Invoice |
|---|---|---|
| Who issues it | The buyer | The supplier (seller) |
| Who receives it | The supplier | The buyer |
| When | Before the goods or services are supplied | When or after they're supplied, or at the stage the deal and local law require |
| Purpose | Authorise the purchase and set out what's ordered | Request payment for what was supplied |
| Key reference | PO number | Invoice number, often quoting the PO number |
| Typical contents | Items, quantities, agreed prices, delivery date, payment terms | Items supplied, prices, tax, total due, due date, bank details |
| Does it request payment? | No | Yes |
The simplest way to remember it: a PO is an order going out from the buyer, and an invoice is a bill coming back from the supplier.
How purchase orders and invoices work together
The two documents sit at opposite ends of the same deal:
- The buyer issues a purchase order. It sets out what they want and the agreed price.
- The supplier accepts and delivers. Delivery paperwork usually quotes the PO number.
- The supplier issues an invoice. It quotes the PO number so the buyer can match it.
- The buyer checks the invoice against the PO. Before paying, their accounts team often confirms the items, quantities and prices match what was ordered and received.
- The buyer pays. Any mismatch, such as a short delivery or a different price, gets sorted out first.
That matching step is why both documents matter. If an invoice doesn't quote the PO number, or its prices don't match the PO, payment is often delayed while someone investigates.
A fictional example: PO and matching invoice
This example is fictional. The businesses, items, prices and tax rate are made up to show how the two documents line up.
Harbor Line Fabrication (the buyer) accepts a quotation from Northfield Components (the supplier). It issues a purchase order, and Northfield later issues a matching invoice:
| Detail | Purchase order PO-0107 | Invoice INV-0215 |
|---|---|---|
| Issued by | Harbor Line Fabrication (buyer) | Northfield Components (supplier) |
| Sent to | Northfield Components | Harbor Line Fabrication |
| Date | 12 November 2026 | 26 November 2026 |
| Reference | Supplier quotation QT-0042 | Buyer's PO-0107 |
| Mounting bracket, Part No. NB-200 | 200 pcs × 4.50 = 900.00 | 200 pcs × 4.50 = 900.00 |
| M8 hex bolt set, Part No. HB-08 | 200 sets × 1.20 = 240.00 | 200 sets × 1.20 = 240.00 |
| Packing and crating | 1 lot × 60.00 = 60.00 | 1 lot × 60.00 = 60.00 |
| Subtotal | 1,200.00 | 1,200.00 |
| Discount (5%) | −60.00 | −60.00 |
| Tax (10%, example rate) | 114.00 | 114.00 |
| Total (USD) | 1,254.00 | 1,254.00 |
| Payment | Terms: 50% advance with order, balance before dispatch | Advance received: −627.00; balance due: 627.00 |
| Delivery | Deliver by 3 December 2026 | Ready for dispatch on receipt of balance |
Harbor Line's accounts team can tick off every line: same items, same quantities, same prices, same total, and the invoice quotes PO-0107. The 627.00 balance is exactly half the 1,254.00 total, because the 50% advance has already been paid. With nothing to query, the invoice can be paid.
Purchase order vs invoice vs receipt
A receipt is the third document people mix up with these two. A receipt confirms that payment has been made. An invoice asks for payment. A purchase order doesn't deal with payment at all; it places the order.
So the usual order is: purchase order (the buyer orders), then invoice (the supplier bills), then receipt (proof of payment).
Purchase order vs quotation
A quotation is the seller's offer: "here's what we can supply and at what price." A purchase order is the buyer's response: "we'd like to order this." Many purchases follow that sequence, with the PO quoting the quotation number, as in the example above.
For how to put together a clear quote, see how to write a quotation for a client. For how quotations, proforma invoices and invoices differ, see quotation vs proforma invoice vs invoice.
What is a purchase bill?
A purchase bill is the supplier's invoice as recorded on the buyer's side, against the purchase order it relates to. It's the same transaction seen from the buying end.
Don't confuse it with your own sales invoice. Your sales invoice is what you send to your customers. A purchase bill is what you record for goods or services you bought from a supplier. In the example above, invoice INV-0215 is Northfield's sales invoice, and Harbor Line would record it as a purchase bill against PO-0107.
How eazmybiz helps
eazmybiz is a web app for B2B business documents. It covers both sides of this transaction:
- When you're buying: create a purchase order with the purchase order generator. Pick the supplier, set your bill-to address and a ship-to address from your company's warehouse addresses, add line items, charges, payment terms and a delivery-by date, then issue it as a PDF. Once the PO is issued, you can convert it into a purchase bill in one click. See create and issue a purchase order for the steps.
- When you're selling: create a branded invoice with your logo, items, tax and chosen currency in the invoice generator, or convert an approved quotation or proforma invoice into an invoice in one click. Businesses outside India use their own tax percent. Indian businesses can issue GST tax invoices with the GST invoice generator.
eazmybiz handles business documents. It isn't accounting software, so it doesn't record payments or keep your books.
FAQs
Is a purchase order the same as an invoice?
No. A purchase order is issued by the buyer to order goods or services before they're supplied. An invoice is issued by the supplier to request payment. They describe the same deal from opposite sides, and the invoice often quotes the PO number.
Who issues a purchase order, and who issues an invoice?
The buyer issues the purchase order to the supplier. The supplier issues the invoice to the buyer.
Can I pay from a purchase order alone?
A purchase order doesn't request payment, so buyers normally wait for the supplier's invoice before paying, unless the agreed terms require an advance. Even then, the supplier usually sends a payment request, such as a proforma invoice, for the advance.
What is the difference between an invoice and a receipt?
An invoice requests payment. A receipt confirms that payment has been received.
What is the difference between a purchase order and a quotation?
A quotation is the seller's offer of items, prices and terms. A purchase order is the buyer's order, often placed after accepting a quotation and quoting its number.
Can a purchase order be converted into a purchase bill?
In eazmybiz, yes. An issued purchase order converts into a purchase bill in one click.
This guide is general information, not tax or legal advice. Check local requirements with your tax authority or adviser.