Purchase Order vs Invoice: What's the Difference?
Two of the most fundamental documents in business transactions — yet many people confuse them. Here's the clear difference between a PO and an invoice.
| Purchase Order | Invoice | |
|---|---|---|
| Created by | Buyer | Seller |
| When | Before goods/services are delivered | After goods/services are delivered |
| Purpose | Authorises a purchase | Requests payment |
| Binding? | Yes — creates a legal obligation | Yes — demands payment |
What Is a Purchase Order?
A purchase order (PO) is a document created by the buyer and sent to the seller. It formally requests goods or services and specifies exactly what is being ordered, the quantity, the agreed price, and the delivery terms. Once the seller accepts it, the PO becomes a legally binding contract.
What Is an Invoice?
An invoice is created by the seller after the goods or services have been delivered. It requests payment for what was delivered, referencing the original PO number where applicable.
How They Work Together
In a typical B2B transaction:
- Buyer sends a Purchase Order to the seller
- Seller delivers goods or services
- Seller issues an Invoice referencing the PO number
- Buyer's accounts payable team matches the invoice to the PO and pays
Do Freelancers Need Purchase Orders?
For most freelancers, POs aren't required — clients just pay your invoices directly. However, larger corporate clients often require a PO number before they'll pay any invoice. If a client asks for a PO, it means they want to go through their procurement process before you start work.
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