A purchase order (PO) is a document generated by the buyer that clearly details the products or services your company plans to purchase from a vendor. By providing this document, buyers and sellers both understand what is expected in the transaction.
This is a new and unique number generated solely for this document. This number is important because it will be used on shipping documents and invoices to show the transaction was pre-approved.
A PO contains all information necessary for the buyer and the seller to agree on what the business has ordered, what is the cost, when delivery is expected and when the buyer expects to pay the supplier.
Purchase orders protect both sides, the buyer and seller, if either makes a mistake. A PO provides legal clarity and concrete instructions for the seller.