Purchase order (PO)
Both sides of the desk
For a distributor the PO cuts both ways. Trade customers send you purchase orders for what they want to buy, and you raise purchase orders to your suppliers to replenish stock. The same document, pointing in two directions, sits at the centre of the order flow.
Why matching matters
The PO only earns its keep if it is reconciled: matched to what was actually delivered and to the invoice that follows. Three-way matching, order to delivery to invoice, is how you catch a short delivery or an over-charge before you pay for it.
Where automation helps
Inbound customer POs can be read and turned into clean orders without anyone retyping them, whatever format they arrive in. Outbound POs to suppliers can be drafted automatically at contracted terms, with a person approving anything that falls outside the rules.
Frequently asked questions
What is a purchase order?
A purchase order is a document from a buyer to a supplier that specifies the products, quantities, prices, and terms being ordered. It is the formal record of what was agreed to buy.
What is the difference between a purchase order and an invoice?
A purchase order is raised by the buyer before the goods are supplied and states what they want. An invoice is raised by the supplier after supply and requests payment. Matching the two, and the delivery, is how you confirm you are paying for what you actually ordered and received.
What is three-way matching?
Three-way matching is checking that the purchase order, the goods received, and the supplier invoice all agree before payment. It catches over-charges, short deliveries, and errors, and is a core control in accounts payable.
Can purchase orders be automated?
Yes. Inbound customer POs can be read and turned into orders without re-keying, and outbound POs to suppliers can be drafted automatically at contracted terms, with a human approving anything outside the rules.
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