![]() This brings us to one of the differences between the two documents. After this agreement is made, the seller has time to prepare the goods ordered and send them to the buyer. BooksTime makes sure your numbers are 100% accurate so you can focus on growing your business.Ī purchase order is an agreement between two parties where the buyer declares a desire to purchase a specific amount and type of goods. Keeping proper financial records is time-intensive and small mistakes can be costly. Now, let’s look a little closer at elements of the whole process (the purchase order and invoice) to offer a more comprehensive comparison. The invoice is then used to confirm a sale, it is a supporting document. What differentiates a purchase order and an invoice is that the first one is only for ordering goods from a supplier or another party and thus defines the terms of such a sale. This is how the purchase process works in a nutshell. Finally, you transfer the money for these items. The waiter brings you a bill for the food and drinks served to you, which is equivalent to an invoice a company would send to the buyer once the items requested are delivered. Then, you finish your meal and ask for the check. ![]() ![]() Once the food is prepared, the waiter brings the food you asked for to your table, thereby fulfilling your purchase order. Although you typically do not do it in writing, whatever you ask the waiter to bring to you is considered to be a purchase order. Let’s say you go to a restaurant and order yourself dinner. To help you better understand how purchase order and invoice play together and at the same time differ, it is best if we describe a life situation you are likely well aware of. It is likely that you will come across two seemingly familiar terms: purchase order and invoice. When you start a business or even try some freelance work, there are many terms and concepts you would need to know.
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