What is a P.O. Number & How to Create It

What is a PO number

If you are a freelancer or a small business owner or planning to start one, then you might have come across the term “PO Number”. Purchase Order or Invoice both relates to the financial documentation of a business transaction. You may be aware of all the information that is included in a purchase order or invoice. But have you ever felt what this PO number is for?

Here in this article, we will discuss the purchase order number in detail. PO Number is a vital attribute that can be referred to in the future. Check out this article to know more about this!

What is a Purchase Order and an Invoice?

Whenever a business deal happens it must be documented. Whether from the buyer’s end or seller’s, keeping a record of the transaction before and after the completion of the project is important. Let’s learn about a purchase order and invoice and how these work.

Purchase Order is issued by the client and includes all the information related to the purchase of a product or service. Moreover, the details involved need to be accurate and exact such that it is very clear to the seller.

On the other hand, an invoice is issued by the business owner or the seller. Generation of an invoice marks the completion of the project or service. An invoice authenticates the business deal with the approval of both parties.

How do these work?

As you have already learned about the purchase order and invoice, make sure you understand the functioning of these financial documents. A purchase order is issued by the client that mentions the specifics of a particular product or service. This document is approved by both parties, hence this is a legally binding document.

Invoice is created by the seller after the sell-out of the product or finishing the project. This financial document ensures that the project is completed on mutual terms. The invoice also legally binds both the seller and the buyer. The only difference is that after the receipt of the invoice copy the buyer must turn up with the payment before the mentioned due date.

What is the information that should be on a Purchase Order?

By now, you have already understood that a purchase order is issued by the customer or the client. It is more of a request made to the company or the business enterprise to provide a specific product or service. Let’s check what information is available in a purchase order.

  • Name of the requester
  • Name of the approver
  • PO Number
  • Product or service name
  • Quantity
  • Price
  • Product delivery date
  • Payment deadlines
  • Tax information
  • Terms and conditions

All the above data are essentially found in a purchase order. This document helps the seller to have a clear idea of the buyer’s requirements.

What is a PO Number?

PO number or a purchase order number is generally found at the top of the purchase order form. This number helps to track the business transaction later in the future. Besides, this number is referred to continuously throughout the business transaction. Moreover, this number is also mentioned in the invoice. PO number on an invoice helps to authenticate the transaction for legal purposes as well.

How is this created?

A purchase order number is created at the buyer’s end. Whether small or large businesses, creating a purchase order template is simple. One can generate or assign numbers to their orders for keeping a track of each transaction. Hence purchase order is something that refers to a specific order that you have made and this is again referred to while generating the invoice.

Various accounting software is available that can assign a number and automatically creates a field for putting this number in the purchase order form. This saves a lot of your time and effort and eases up your job.

What are PO Invoice and Non-PO Invoice?

Lastly, as we have understood the theory of a purchase order number, let’s discuss PO and Non-PO Invoice. The basic difference between the above-mentioned terms is that the first one consists of a PO number, whereas the latter one does not.

PO invoice holds a specific PO number that was mentioned initially in the purchase order. But a Non-PO invoice doesn’t have that as a purchase order was not created for a specific transaction. There are some cases where a purchase order may not be generated.

  1. In case of urgent deliveries, a transaction may proceed without a purchase order. In such cases, the invoice generated wouldn’t have the PO number and is considered as a Non-PO invoice.
  2. Secondly, company policies vary a lot. Some companies may not issue a purchase order for every transaction. Only those transactions that exceed a particular figure of a dollar are entitled to have a purchase order.
  3. Lastly, small business enterprises may not have enough resources for generating a purchase order. Hence, in that case, the invoice created would be a Non-PO invoice.

PO number is a significant number that ensures that a specific transaction happened between two parties with their mutual consent. With Billbook invoicing software you can ease up all your financial documentation. Save your pocket and time and get this software now!

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