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What Is a Purchase Order Invoice?

A purchase order invoice can protect both the buyer and the seller.
A purchase order invoice includes the cost of shipping.
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  • Written By: Felicia Dye
  • Edited By: Heather Bailey
  • Last Modified Date: 21 October 2014
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A purchase order invoice is a document used in business transactions. The name of this document stems from the fact that a purchase order number is included. This number will then be used throughout the duration of the transaction. It is possible to have numerous purchase order invoices between a buyer and seller at any given time. Such a document can be used for goods or for services.

For a contract to be legal there must be an offer and an acceptance. The exchange of money and goods between a buyer and supplier is a contract. In such a situation, the purchase order invoice can be viewed as an offer because the buyer expresses a willingness to purchase a specified amount of certain goods at a certain price. The supplier accepts by fulfilling the order, issuing a bill, and receiving payment.

A purchase order invoice generally contains numerous pieces of information. The buyer should clearly be identified, including his contact details. In addition to this, there is usually a space provided for the shipping address since businesses may have more than one place of operation. The purchase order number is a very important piece of information normally found at or near the top of the document.

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The person who makes the order should be listed on the invoice. Special terms that apply to the transaction are generally included. The order should be thoroughly outlined including the names of items or services, the quantity, sku numbers, and prices. The buyer may also calculate tax, shipping and handling, and other costs.

A purchase order invoice can protect both the buyer and the seller. On the buyer’s behalf, there is evidence he asked for a certain number of specific products and was expecting to pay a specified price. If the seller provides other products or services or tries to increase the price, the buyer will have a document which records his original offer. The seller is protected because without such a document the buyer could request goods and then refuse to accept or pay for them.

Numerous purchase order invoices may exist because a buyer may place new orders before previous orders are filled. For example, say Charlie’s Maintenance gets a contract to replace a roof. Charlie may use a purchase order invoice to request the supplies for the job. Later that day, Charlie’s Maintenance could get another contract to repair a dock. The supplies needed for this job would likely be placed on a different purchase order invoice.

This highlights the importance of the purchase order number. Whenever the two parties communicate, this number will generally be used to eliminate confusion. This includes when queries are made regarding order status, when backorder notices are sent, and when bills are issued.

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