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A Purchase Order (PO) is a formal document sent by a buyer to a vendor authorising a purchase. It specifies items, quantities, prices, delivery dates, and payment terms. Once accepted by the vendor, it becomes a legally binding contract.

A complete PO should include: PO number, date, vendor details, shipping address, line items with description/quantity/unit price, taxes, total amount, delivery date, payment terms, and any special instructions or terms & conditions.

A PO is issued by the buyer before goods/services are delivered — it's a request to purchase. An invoice is issued by the seller after delivery — it's a request for payment. The invoice should reference the PO number for reconciliation.

A PO becomes a binding contract once the vendor accepts it (by signing, acknowledging, or shipping goods). Until accepted, it's an offer. This is why PO terms & conditions are important — they define legal obligations for both parties.