Purchase Order

Last updated: June 20, 2026

A purchase order is your formal commitment to buy: the document you send a supplier that says exactly what you want, at the agreed price, and against which receiving and the bill are then checked. It is the hub of the buy, the mirror of the sales order on the selling side, and the single reference everything downstream ties back to.

What you will learn
  • What the purchase order commits you to
  • What its screen captures
  • How it drives both goods receive and the invoice
  • What it tracks as the order is fulfilled and paid
Purchase Orderordered 500Goods Receivereceived 480Purchase Invoicebilled 500Three-way matchdo they agree?Ordered vs received vs billed: the gap of 20 is the question to settle
The control of buying: what you ordered, what arrived, and what you were billed should agree simplified mockup

Anatomy of the screen

  • Vendor block – the supplier, their attention contact, address and email.
  • Document block – the order number, a link to the requisition, the vendor's quotation reference, the needed-by date, the deliver-to location, currency and the payment term.
  • Line items – the goods or services, with quantity, price, tax and discount, totalled the usual way.
  • Requirements, remarks, notes and attachments, and action buttons to raise a goods receive or a purchase invoice.

How it behaves

The reference everything checks against

Once confirmed, the purchase order is the anchor. From it you raise the goods receive (what arrives) and the purchase invoice (what you are billed), and both link back to it. That shared parent is what makes the three-way match above possible: ordered, received and billed are all measured against the same order.

Tracking goods and money

The order keeps two running tallies: goods ordered against goods received, and amount invoiced against amount paid, with the pending balance falling out of the difference. Milestones for expecting, receiving and invoicing give a plain reading of how far along the order is, on both the physical and the financial track.

Lifecycle

A purchase order runs Draft, Verify, Active, optionally Hold, then Complete, with Cancel available, exactly mirroring the sales order. One order can yield several receipts (the vendor ships in parts) and several invoices.

Worked example

You confirm a purchase order for 500 units at 2.00 on net-30 terms. The vendor ships 300 first, so you raise a goods receive for 300; the received tally moves while 200 stay outstanding. Their bill arrives and you raise a purchase invoice against the order, ready to be matched and paid.

Edge cases and good practice

  • The order is the commitment – where the requisition only requested, the order obliges you to buy.
  • Expect partials. One order routinely spawns several receipts and several invoices; the tallies keep count.
  • Hold parks an order without cancelling, for instance pending a credit check or a spec change.

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