Purchase order vs Invoice vs Receipt

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When a buyer places an order with a seller, it does so with a Purchase Order.

A Purchase Order (PO) is a document sent by a purchaser to a supplier that details the description and quantity of goods, prices, order placement and shipping dates, any discount terms, Freight on Board FOB information, and a signature of the approving authority. This document is considered legally binding after the supplier accepts it as it shows the buyer’s promise to buy the mentioned goods and services. Purchase Order software is usually employed to track the status of POs.

As the supplier dispatches the goods, it sends an invoice to the buyer. This invoice shows the due payment. Invoices are compared to PO and Goods Receipt Note in a process of three-way matching before the payment is dispatched.

As the seller receives the payment, they send over a receipt for record-keeping purposes. This receipt is not intended for any future use but is proof of a completed transaction.

Recommended Reading:

• Purchase order - Complete Guide
• How to set up a purchase order system
• Procurement Process - How to streamline it?
• PO System - How to create your own using Kissflow?
• PO Tracker - How to Keep Track of POs Efficiently?
• Purchase Order Process – Everything you need to know
• Procure-to-Pay Process - The Ultimate Guide
• Procurement KPIs - You Can’t Ignore
• Vendor Management Tools - Every Organization Needs to Consider
• Procurement Strategy - How to build?
• Purchase Requisition - The Definitive Guide
• A Guide to Modern Vendor Relationship Management