Also known simply as a PO number, a purchase order number is an alphanumeric code that is assigned to each order that a business places with a vendor. Internally, the number makes it possible to apply the costs of those orders to the budgets of the departments that placed the orders. The PO number also provides the accounts payable team with verification that the expense is legitimate, and payment may be rendered to the vendor.

In many company settings, the purchase order number is assigned after a department submits a request for the order of certain goods and services. The request is formally submitted to a purchasing agent, typically using what is known as a requisition form. If the request is approved, a purchase order is created, and the purchase order number is associated with the requisition. At that point, the order is placed with a vendor, who also records the PO number for inclusion on the order detail.

As the vendor prepares a shipping or packing list to go with the customer’s order, the purchase order number is included as a reference on the detail. This makes it possible for the receiving agent at the customer’s place of business to not only check the quantity and type of goods delivered, but also to confirm that the shipment is associated with a properly authorized order. In like manner, the purchase order number also appears on the invoice and any other correspondence that the vendor issues to the customer. From this perspective, the PO number expedites the scheduling of payment to the vendor, and also allows the goods to be routed to the proper department with a minimum of delay.

The exact construction of a purchase order number will vary from one company to another. Many businesses that operate multiple locations and make use of a central purchasing department will use the first three or four characters of the number to identify the facility location. The next several characters may have to do with the sequencing of orders placed on behalf of the location, while the remaining characters often help to associate the order with the department within the facility that ultimately receives the items ordered. Companies structure PO numbers in whatever manner works best with their internal tracking systems. In response to this, many vendors configure the fields in their order tracking databases to allow up to thirty characters for the purchase order number.