The Procurement Glossary » Purchase Order (PO)

Purchase Order (PO)

Procure-to-Pay

Also known as: PO

Definition

A buyer's official document authorising a purchase from a supplier, stating items, quantities, prices and terms; once accepted it forms a contract.

Explanation

The PO is the commercial commitment that a requisition becomes after approval. It gives the supplier clear instructions and the buyer a control document to match receipts and invoices against, forming the backbone of spend control and three-way matching.

Example

On approval, the system issues PO #4471 to the supplier for 24 chairs at RM180 each, net 30 days.

Related terms

• Purchase Requisition (PR) — An internal request to buy something, raised by a staff member and routed for approval before any order is placed.
• Three-Way Matching — An invoice-control check comparing the purchase order, the goods-receipt record and the supplier invoice before payment.
• Goods Receipt (GRN) — The record confirming that ordered goods have arrived, capturing quantity and condition against the purchase order.
• Blanket Purchase Order — A single purchase order covering repeated deliveries of goods or services over a period, at agreed prices, released as needed.

Related concepts

• Procure-to-Pay (P2P) — The end-to-end operational buying cycle — from requisition and approval to purchase order, receipt, invoice matching and payment.

Learn more

• Purchase Order Guide

Frequently Asked Questions

What is Purchase Order (PO)?

A buyer's official document authorising a purchase from a supplier, stating items, quantities, prices and terms; once accepted it forms a contract. The PO is the commercial commitment that a requisition becomes after approval. It gives the supplier clear instructions and the buyer a control document to match receipts and invoices against, forming the backbone of spend control and three-way matching.

Can you give an example of Purchase Order (PO)?

On approval, the system issues PO #4471 to the supplier for 24 chairs at RM180 each, net 30 days.

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