What is a purchase order? #
A purchase order (PO) is a document used in business to authorize a purchase transaction. It is typically used by a buyer to request goods or services from a supplier, and it serves as a legally binding agreement between the buyer and supplier. A purchase order typically includes details such as the items or services being purchased, the quantities, the prices, the delivery date, and any special instructions or terms of the purchase.
The purchase order is usually created by the buyer and sent to the supplier, who then acknowledges receipt of the purchase order and confirms that they are able to supply the goods or services as requested. Once the supplier has shipped the goods or provided the services, they will send an invoice to the buyer for payment.
The purchase order is an important document in the accounting process as it serves as a record of the company’s purchase transactions, and it helps to ensure that the company is paying for the correct goods and services, and at the correct prices. It also helps to maintain accurate financial records and can be used as a reference for budgeting, forecasting and auditing.