Purchase Order (PO)
A Purchase Order (PO) is a formal document issued by a buyer to a seller authorizing the supply of goods or services under agreed terms. It outlines key details such as product description, quantities, pricing, delivery dates, and payment conditions. Once accepted by the seller, the PO becomes a binding commercial agreement. It provides clarity and structure before production or shipment begins.
In logistics and trade operations, the PO acts as the foundation for the entire order-to-shipment process. Sellers use it to prepare goods, arrange transport, and generate invoices. Buyers rely on it to track orders, control spending, and verify deliveries. The PO also supports accurate documentation and smooth coordination across supply chain teams.
A PO helps reduce misunderstandings by clearly defining expectations on both sides. It creates a reference point for customs, accounting, and audit purposes. Matching the PO with invoices and shipping documents ensures consistency. This process improves transparency and accountability in transactions.
Overall, the Purchase Order is a critical control document in commercial trade. It formalizes the buyer’s intent, supports efficient order fulfillment, and ensures goods or services are delivered as agreed. When managed properly, it strengthens trust and efficiency between trading partners.
Frequently Asked Questions about Purchase Order (PO)
Clear answers to the most common questions people have when learning about Purchase Order (PO).
Yes. Once the seller accepts it, the PO becomes a legally binding agreement under the agreed terms.
It triggers order processing, shipment planning, and invoice creation, and acts as a reference throughout the supply chain.
Discrepancies can lead to delays, rejections, or payment issues, which is why PO accuracy is essential.