Purchase Order (PO)

A buyer-issued document authorizing a purchase from a supplier, often referenced on invoices for 3-way matching.

What Is a Purchase Order?

A purchase order (PO) is a formal document issued by a buyer to a supplier authorizing the purchase of specific goods or services at agreed-upon prices and quantities. The PO is issued *before* the goods or services are delivered; the vendor invoice comes *after*.

A typical PO includes: PO number, issue date, buyer name and address, supplier name and address, description of goods or services, quantity, unit price, total amount, delivery terms, and payment terms.

PO vs. Invoice

The distinction matters for bookkeepers:

A purchase order is buyer-generated. It is a commitment to buy. It does not represent money owed — it represents intent.
A vendor invoice is supplier-generated. It is a demand for payment after goods or services have been delivered.

Many vendor invoices reference the corresponding PO number in a field like "PO #," "PO Number," or "Order Reference." This linkage is what enables 3-way matching.

PO Numbers in Invoice Data Extraction

When extracting invoice data, capturing the PO number is important for any client that uses purchase orders. The PO number allows the extracted invoice data to be matched against open POs in the accounting system — a critical step before approving payment.

SkipEntry extracts PO numbers as a standard field, and they can also be configured as a custom extraction field for clients who use non-standard PO field labels.

3-Way Matching Overview

When a PO is present, the AP process typically requires a 3-way match before payment is approved: the PO (what was ordered), the receiving report or packing slip (what was actually received), and the vendor invoice (what is being charged) must all agree on quantities, prices, and totals. See the Three-Way Matching entry for full details.

When POs Are and Aren't Used

Larger organizations and government entities almost always use formal POs. Many small businesses do not — they order verbally or via email, and invoices arrive without a corresponding PO. This is normal; not every AP workflow requires PO matching. But for clients that do use POs, accurate PO number extraction is essential.