3 Key Differences between Invoice and Purchase Order

3 Key Differences between Invoice and Purchase Order

Professionals dealing with procurement handle a lot of documentation while purchasing goods and services. This is why many organizations insist on familiarizing their employees with the necessary financial documents and purchase order data entry during training. To help the new employees perform well at work, we need to educate them about the essential documents and details we need to include in a purchase order entry. In the upcoming section, we will look at some of the significant differences between an invoice and a purchase order- two essential documents that help us make a purchase order data entry.

invoice and purchase order

Basic Difference between a Purchase Order and an Invoice

As the term implies, buyers create purchase orders, and vendors issue invoices. The procurement team acts like the middleman, processing and approving the purchase order to send it to the vendor. Hereafter, the vendor sends the invoice to pay for the goods/ services provided. Given below are other differences.

  1. Details 

What are the details required in a purchase order? A purchase order will only look complete when it has a detailed description of the requirement, the concerned brand, delivery date and address, and the terms and conditions of payment.

On the other hand, an invoice will have the purchase order, invoice number, and item-wise cost list. In other words, the details mentioned in the purchase order help the vendor understand the details for smooth delivery, and those in the invoice are to share the payment details with the buyer.

  1. Timing

If we are the organization that wants to make the purchase, we will begin the transaction by creating a purchase order. This helps us initiate sales by sharing the order with the vendor.

On the other hand, a vendor would issue the invoice for a transaction only after meeting the buyers’ demands. In other words, we create a purchase order initially, and our vendor creates an invoice toward the end of the transaction.

  1. Purpose

We will not make a purchase order data entry or create an invoice for the namesake. Purchase order entry and invoice serve their purposes. While we generate purchase orders to initiate transactions between the vendors and us, they send invoices when after meeting the concerned order.

Now you know some of the factors that distinguish an invoice from a purchase orders. This will help you pay more attention to the details while making a purchase order data entry (also known as purchase order entry). It will also help you minimize errors while you deal with purchase orders and invoices.