What is a purchase order?
A purchase order (PO) is a document a buyer sends to a vendor or supplier to formally request materials or services. It lists what's being ordered, the quantity, the agreed price, and the expected delivery date. Once the vendor accepts it, the PO becomes a binding agreement on the terms of the order.
When should you use a purchase order?
If you're a contractor ordering lumber, tile, or equipment from a supplier before a job, a PO gives you something in writing before money changes hands. It prevents misunderstandings about what was ordered, at what price, and when it needs to arrive. It also helps you track spending per job and simplifies bookkeeping at tax time.
PO number and record keeping
Always assign a PO number and ask your vendor to reference it on their invoice back to you. This makes it easy to match incoming invoices to the orders you placed. Keep copies of all POs — if a vendor bills you for the wrong amount or quantity, your PO is your first line of defense.
Frequently Asked Questions
What's the difference between a PO and an invoice?
A purchase order is created by the buyer before the work or delivery happens — it's an authorization to proceed. An invoice is created by the seller after the work is done — it's a request for payment. They reference the same job but come from opposite sides.
Do I need a PO for small purchases?
Not always, but it's good practice for any purchase where you want a paper trail. For larger material orders or ongoing vendor relationships, a PO protects you if pricing or quantities ever get disputed.
Can I use this for ordering subcontractor work?
Yes. A PO works for materials, services, or subcontractor labor. Fill in the description field with the scope of work instead of a product name.