What is the Difference Between Invoice and Purchase Order?

The main difference between a purchase order and an invoice lies in their purpose and when they are sent during the purchasing process. Here are the key distinctions between the two:

Purchase Order (PO):

• Sent by the buyer to the vendor to track and manage the purchasing process.
• Created when the buyer places an order.
• Defines the terms of a purchase, including order details, shipping information, vendor details, and price.
• Prevents overstocking of inventory and ensures better visibility into the purchasing process.
• Becomes a legally binding document once the vendor accepts the order.

Invoice:

• Sent by the vendor to the buyer as an official request for payment for the goods or services provided.
• Generated after the order is fulfilled.
• Defines the confirmation of a sale and includes options for payment, such as check or electronic payments.
• Prevents duplicate and overpayments, optimizing spend and making it easier to track inventory.
• Not a legally binding contract, but a communication of a request for payment.

In summary, a purchase order is sent by the buyer to initiate a transaction, while an invoice is sent by the vendor to collect payment for the completed transaction.

Comparative Table: Invoice vs Purchase Order

Here is a table comparing the differences between an invoice and a purchase order:

Some similarities between purchase orders and invoices include order details, price, vendor information, shipping details, and general information on a transaction. However, purchase orders are sent by the buyer to the vendor to track and manage the purchasing process, while invoices are sent by the vendor to the buyer to request payment for goods or services already delivered.