What is the difference between a purchase order and an invoice?

A purchase order is the document a buyer sends a supplier to order goods or services at agreed prices, before anything is delivered. An invoice is the supplier’s request for payment after delivery. Accounts payable compares the two, and usually a receipt, so it pays only for what was ordered and received.

Purchase Order vs Invoice: Key Differences

Purchase order vs invoice: the key differences

A purchase order records what the buyer agreed to buy and at what price; an invoice records what the supplier says it delivered and wants paid. The PO creates no accounting entry; the invoice, once entered as a bill, creates a payable.

Purchase order and invoice compared
	Purchase order	Invoice
Who issues it	The buyer	The supplier (the seller)
Who receives it	The supplier	The buyer’s accounts payable team
When	Before the goods or services are supplied	After delivery, or on agreed billing dates
Purpose	Order goods or services at agreed prices and terms	Request payment for what was supplied
Key number	PO number, set by the buyer	Invoice number, set by the supplier, usually quoting the PO number
Key fields	Items, quantities, unit prices, delivery date and address, payment terms	Items billed, quantities, prices, tax, freight, total due, due date, remittance details
Accounting effect	None: a commitment to spend, not a liability	Entered as a bill: debit expense or inventory, credit accounts payable
Legal effect	An offer to buy; binding once the supplier accepts it	A demand for payment under the agreed order or contract
What AP does with it	Uses it as the reference the invoice is checked against	Checks it, approves it and schedules it for payment

The accounting difference is the one that matters at month end. Accounting systems record the payable when the bill or receipt is posted, not when the order is entered. Microsoft’s Business Central help, for example, describes vendor and general ledger entries being created when a purchase document is posted, and does not let you invoice a purchase order for items that have not been received (Microsoft Learn). Open POs are commitments you track, not balances on the balance sheet.

The document flow: purchase order to payment

One purchase produces a chain of documents: the purchase order, the supplier’s delivery note, your goods received note, the supplier’s invoice and finally the payment. Each one is checked against the one before.

1
Purchase order
The buyer sends the supplier a PO listing the items, quantities, prices and terms, with a PO number.
2
Supplier accepts
The supplier confirms the order, or simply ships it. From here both sides are working to the PO.
3
Delivery and receipt
The goods arrive with the supplier’s delivery note, and your team records what actually arrived on a goods received note. For services, the budget owner confirms the work was done.
4
Invoice
The supplier sends an invoice quoting the PO number, for what it shipped or completed.
5
Match and approve
AP compares the invoice with the PO (two-way match), and with the receipt as well in a three-way match. Invoices within tolerance are approved; the rest become exceptions.
6
Payment
The approved bill is paid on its due date, and the PO is closed once it is fully invoiced.

Before the purchase order there is often a purchase requisition, the internal request to buy. See purchase requisition vs purchase order.

Worked example: a PO and the invoice that arrives

A distributor orders 200 units at $12.50 on a $2,500.00 purchase order. All 200 arrive, but the invoice bills $13.10 a unit plus $85.00 freight: $2,705.00 in total. Illustrative numbers.

PO 4471 compared with the supplier’s invoice
Field	Purchase order	Invoice	Result
PO number	4471	4471 quoted	Matches
Quantity	200	200	Matches the PO and the 200 received
Unit price	$12.50	$13.10	4.8% over the PO
Line total	$2,500.00	$2,620.00	$120.00 over
Freight	Not on the PO	$85.00	Check the agreed shipping terms
Invoice total	$2,500.00	$2,705.00	$205.00 more than ordered

With a price tolerance of 2%, a 4.8% increase is an exception: the invoice should not go to payment as it stands. The quantity is fine, so the questions are only about price and freight. Did the buyer agree a new price? Do the terms make freight the buyer’s cost?

What to do when the invoice and PO don’t match

Hold the invoice, find out which field differs and why, and fix the document that is wrong: a corrected invoice or credit memo from the supplier, or an amended PO if the change was agreed. Do not pay the difference and sort it out later.

Common PO and invoice mismatches
Mismatch	Common cause	What to do
Price higher than the PO	Price increase the buyer did not pass on, or a supplier error	Ask the buyer; amend the PO if agreed, otherwise request a credit memo
Quantity higher than received	Billed for the full order on a short delivery	Pay for what the receipt shows; ask for a corrected invoice
Items not on the PO	Substitutes, extras or a second order on one invoice	Confirm with the buyer; raise a PO for genuine extras
Freight, fuel or other surcharges	Terms not written on the PO	Check the PO and contract terms before accepting
Missing or wrong PO number	Supplier did not quote it	Find the PO by supplier and items, and remind the supplier to quote it
Total exceeds what is left on the PO	Earlier partial invoices already used part of it	Check billed-to-date; see partial invoices

Unit-of-measure differences (the PO in units, the invoice in cases) cause many false exceptions. Enter POs in the unit the supplier bills in. Tolerances, partial deliveries and the journal entries are covered in the three-way matching guide and partial invoices.

The PO number on an invoice

The PO number is what ties an invoice to its order. Suppliers should quote it on every invoice and delivery note, so AP can find the right PO without searching.

Where it goes on the invoice, what to do when it is missing and how to ask suppliers to include it are covered in PO number on an invoice. If you are entering the bill in QuickBooks Online, Intuit’s help shows how to add the open purchase order to the bill, adjust quantities for a partial delivery, and let QuickBooks close the PO once everything has been billed (Intuit). Purchase orders are only on the Plus and Advanced plans; see purchase orders in QuickBooks Online.

Invoices without a purchase order

Not every invoice has a PO. Rent, utilities, subscriptions and many services arrive as non-PO invoices; with nothing to match, the control is an approval from the budget owner.

Route non-PO invoices by amount, department or GL account to the person who owns the budget, and set a rule for which spend needs a PO, for example all goods and any service over a set amount. An invoice that should have had a PO but did not is worth flagging: it usually means someone ordered outside the process. See invoice approval routing.

How Aequo AP matches invoices to purchase orders

Aequo AP matches each invoice to its purchase order line by line, and to the delivery note for a three-way match, with price and quantity tolerances set globally or per supplier.

You can raise POs in Aequo AP or import them from your accounting system. Invoices that fit within the PO’s tolerances move on to approval; the rest become exceptions with a reason and an owner. Installment and progress invoices that fit within what is left on the PO are tracked as partial invoices rather than flagged. Aequo AP does not pay suppliers: approved bills sync to your accounting system and are paid from there. See purchase orders in Aequo AP.

Frequently asked questions

Is a purchase order an invoice?

No. A purchase order is the buyer’s request to buy, sent before delivery. An invoice is the supplier’s request for payment, sent after delivery or on agreed billing dates. They often show the same items and prices, which is why accounts payable compares them, but only the invoice asks to be paid.

Can you pay from a purchase order?

You should not. A purchase order says what you agreed to buy, not what arrived or what the supplier is charging. Pay from the supplier’s invoice once it has been checked against the PO and the receipt. The main exception is a prepayment or deposit the PO itself requires, which should still be backed by a proforma or deposit invoice.

Which comes first, the purchase order or the invoice?

The purchase order. The buyer raises it before ordering, the supplier delivers, and the invoice follows. A PO raised after the invoice arrives only copies the invoice and controls nothing.

Is a purchase order legally binding?

Generally a purchase order is an offer, and it becomes binding once the supplier accepts it. For sales of goods in the US, Article 2 of the Uniform Commercial Code treats an order for prompt shipment as inviting acceptance by a prompt promise to ship or by shipping. Terms on the PO or in a master agreement govern disputes. This is general information, not legal advice.

What is a purchase invoice?

A purchase invoice is a supplier’s invoice seen from the buyer’s side: the bill you receive for goods or services you bought. It is the same document the supplier calls a sales invoice. In a purchase invoice vs purchase order comparison, the purchase invoice is the bill and the purchase order is the order that came before it.

Does every invoice need a purchase order?

No. Rent, utilities, subscriptions and small recurring services are usually handled as non-PO invoices and approved by the budget owner instead of being matched. POs earn their keep on goods and on larger or one-off purchases.

Automate matching, approvals and exception handling

Aequo AP captures invoices, matches them to purchase orders and receipts, routes approvals and flags duplicates and exceptions, then syncs with QuickBooks Online, Xero, FreshBooks, Zoho Books or Business Central.

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Sources

Checked on November 9, 2026. Vendor capabilities and prices change; confirm current details with each vendor.

Microsoft Learn, Record purchases (Business Central) — ledger and vendor entries are created when a purchase document is posted; a purchase order cannot be invoiced for items not yet received
Intuit, Add purchase orders to expenses, bills, or checks in QuickBooks Online — adding an open PO to a bill, partial quantities, automatic closing; POs on Plus and Advanced only
Uniform Commercial Code § 2-206 (Cornell LII) — an order for prompt shipment invites acceptance by a promise to ship or by shipment