Purchase Order Guide: What to Include, With a Free Checklist
What a purchase order is, which details make it enforceable and easy to match against the supplier's invoice, and how to raise one step by step.
Billing a client instead?
BuildWithRiz's free generator makes invoices — every PDF is headed "Invoice" — so it is the tool for the supplier side of the deal, not for raising a PO. Use the checklist below for your purchase order; if you are the supplier, quote the buyer's PO number on the invoice you create in the generator.
Open the invoice generatorWhat is a purchase order?
A purchase order (PO) is a formal document a buyer sends to a supplier to request specific goods or services at an agreed price. Once the supplier accepts the PO, it becomes a legally binding contract. POs give both sides a clean paper trail, make procurement easier to audit, and prevent "I thought we agreed on..." disputes.
When should you issue a purchase order?
- Ordering materials, equipment, or stock from a supplier
- Engaging a subcontractor for defined scope (e.g. a designer hiring a copywriter)
- Buying services where your accounting team requires a PO reference
- Large one-off orders where a handshake isn't enough documentation
- Any purchase that needs manager approval before the vendor starts work
What every purchase order must include
- "Purchase Order" clearly labeled at the top
- A unique PO number (e.g. PO-2026-001) — suppliers will quote this on their invoice
- Your (buyer) business name, address, and contact
- Supplier (vendor) business name and address
- Issue date and required delivery/completion date
- Itemized list — description, quantity, unit price, line total
- Subtotal, taxes, shipping, and grand total
- Payment terms (e.g. Net 30 after delivery)
- Shipping or delivery address if different from billing
- Authorized signature or approver name
From purchase order to payment
A purchase order is only useful if the rest of the process refers back to it. A simple flow that works for a small business:
- Approve the PO internally before it goes out, so spending is authorised up front rather than after the bill arrives.
- Send it and get it accepted. Ask the supplier to confirm in writing; the accepted PO is the agreement on price, quantity and dates.
- Handle changes as amendments. If quantities, prices or dates change, issue a revised PO with the same number and a revision mark rather than agreeing it in a chat thread.
- Record what actually arrived — a delivery note or goods-received entry for products, or a sign-off for a service.
- Match the supplier's invoice to both before you pay: same PO number, same quantities, same prices.
Accountants call that last step the three-way match. It catches the common errors — wrong quantities, old prices, an invoice paid twice — before money leaves the account.
Purchase order vs invoice — who sends what?
| Document | Who sends it? | When |
|---|---|---|
| Purchase order | Buyer → Supplier | Before work starts |
| Invoice | Supplier → Buyer | After work completes |
The invoice the supplier eventually sends should reference the PO number — that's how accounts payable matches the two documents. For more on invoice structure and payment terms, see how to create a professional invoice.
FAQ
Is a purchase order legally binding?
Once the supplier accepts it — yes. A PO is an offer; acceptance creates a contract. Both sides are then bound to the agreed terms, price, and delivery.
What's the difference between a PO and a proforma invoice?
A PO is sent by the buyer to request something. A proforma invoice is sent by the supplier to preview what will be billed. If you need the supplier-side document, use our proforma invoice guide instead.