Guides

Purchase orders: the number that gets your invoice paid

What a PO is, why larger clients insist on one, what the three-way match is, and why a freelancer should ask for a PO number before starting.

A purchase order looks like bureaucracy until you have had an invoice sit unpaid for six weeks because nobody could match it to an approved commitment. The PO is that commitment, and its number is what links your invoice to it.

Who issues what

The buyer issues a purchase order before the work: this is what we want, at this price, delivered by this date. The seller issues an invoice after: this is what we supplied, now pay. A quote comes before both and commits nobody.

The three-way match

Accounts payable at a larger company generally pays an invoice only when three documents agree: the purchase order, the record that the goods or services arrived, and the invoice itself. That is the three-way match, and it is why an invoice with no PO number stops moving — not because anyone doubts it, but because there is nothing for it to match against.

If you are the freelancer

Ask one question at the start of the engagement: "do you need a PO number on invoices, and if so who raises it?" It takes thirty seconds and removes the single most common cause of a late first payment.

If you are the buyer

Issuing POs — even to yourself, even as a two-person company — gives you one thing worth having: a record of what you committed to before the invoice arrives. It is the difference between checking an invoice and remembering an invoice.

Worth knowing

• Once accepted, a purchase order generally forms a contract on the terms it states, so the terms box is not decoration. That is orientation, not legal advice.