The Difference Between Purchase Order and an Invoice

The supplier and the client make up the most important part of the business world. The transaction between these two entities is filled with documents and terms that are not easily understood by outsiders.  If you’re not familiar with the different terms in the business and the acute difference between these documents, you can easily land yourself in embarrassing situations. This only serves to make you look inexperienced and immature in front of your client.

In commercial ventures, you would frequently come across two terms: purchase order and invoice. If you are going to start learning about the different terms in business, it is given that we start with these two. Soon, you will be filling out paperwork, and issuing slips like purchase orders and invoices to your client at the right time and taking the business world by storm.

Of course, there are also neat online tools like Quikflw that do the most important things for you automatically and allow you to create professional purchase orders, invoices, quotations and much more in just a few seconds, but let’s have a look at the actual differences between purchase order and invoice now.

Purchase Order

A purchase order is a document that is issued by a customer towards the company they wish to buy the product from, and it states the quantity of the product they want to buy. It includes things such as the price of each separate product or service, the date on which the order should be delivered, the method of payment, the information of the client, the information of the supplier, purchase order number and other terms and conditions.

In case the customer is a regular at the company, the customer might issue a standing purchase order. It essentially allows a customer to order the same product or service over a period of time, stated in the purchase order using the same purchase order number.

Purchase orders are issued as an official confirmation. They help the businesses keep track of when and how they need to deliver the goods to their customer. It lets them manage their inventory neatly, along with deciding what to write on their invoices for their customers. The purchase order can help orders from being mixed up.


Invoice is what comes after the terms in the purchase order have been fulfilled. It is a request of payment by the company that supplies the good to the customer and states the products and price of each product or service and the ultimate amount payable by the customer. It specifies the date by which the customer has to pay the amount due. Otherwise, it is assumed to be 30 days. The invoice contains other things such as the supplier’s and buyer’s information along with discount rates and taxes if applicable.

Other than the fact that an invoice is used by businesses to inform their customers what is owed by the company, it is a great way for a business to keep track of its earnings and inventory. It can act as the ultimate document of all the transactions made by a business. It can even be used during annual taxation, as it can be used to keep track of how much revenue a business collected in the previous year.

To summarise, a purchase order is a contract issued by the customer while an invoice is a request of payment issued by the business on the fulfillment of the terms of the contract. Both serve a different purpose in the business world, but they are both useful written records to keep track of the deals made in the year before.

After reading through this, you are now informed about two of the most important terms in business. In the future, when you step into the commercial scene, this should help to make your life easier.