A formal document issued by a buyer to a seller specifying the types, quantities, prices, and terms of products or services to be purchased.
A Purchase Order (PO) is a legally binding commercial document that initiates a purchase transaction. It specifies what the buyer wants, at what price, delivery terms, and payment terms. Once the seller accepts the PO, it becomes a contract. The PO-to-payment cycle includes: Requisition → PO creation → PO approval → Vendor acceptance → Goods receipt → Invoice matching (3-way match: PO vs Receipt vs Invoice) → Payment. PO numbers help track orders, manage budgets, prevent unauthorized purchases, and resolve disputes.
PO #2026-0423 to ABC Supplies: 500 units of Part-A at ₹120/unit = ₹60,000, 200 units of Part-B at ₹250/unit = ₹50,000. Total ₹1,10,000 + 18% GST = ₹1,29,800. Delivery by May 15, 2026. Payment: Net 30.
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Yes, once the seller accepts the PO, it becomes a binding contract. The buyer is obligated to pay for goods/services as specified, and the seller is obligated to deliver. This is why PO approval workflows are critical — they prevent unauthorized commitments.
A verification process matching three documents: 1) Purchase Order (what was ordered), 2) Goods Receipt Note (what was received), 3) Vendor Invoice (what was billed). All three must agree on quantities and prices before payment is approved. This prevents overpayment and fraud.
A commercial document issued by a seller to a buyer, detailing the products or services provided, quantities, prices, and payment terms.
Money a business owes to its suppliers or vendors for goods and services received but not yet paid for.
A ratio that measures how many times a company's inventory is sold and replaced over a specific period, indicating sales efficiency and inventory management.
A comprehensive list of raw materials, components, and sub-assemblies required to manufacture a finished product, along with quantities and specifications.
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