What is Purchase Order?
A purchase order (PO) is a formal document issued by a buyer to a seller authorising the purchase of goods or services at agreed prices. It becomes a binding contract once accepted by the seller.
A purchase order (PO) is a document created by the buyer — not the seller — to formally request and authorise a purchase. It specifies the goods or services required, quantities, agreed prices, and delivery terms.
As a freelancer, you will typically encounter purchase orders when working with:
- Larger companies with formal procurement processes
- Government or public sector clients
- Agencies that manage budgets across multiple suppliers
The purchase order process typically works like this:
- The client issues a PO with a unique PO number
- You review and accept the PO (confirming the agreement)
- You complete the work or deliver the goods
- You issue an invoice referencing the PO number
- The client's accounts team matches your invoice to the PO before paying
Including the PO number on your invoice is critical when working with larger organisations. Without it, your invoice may be rejected or delayed by their accounts payable department.
A purchase order differs from an invoice in that the PO is issued by the buyer before work begins, while an invoice is issued by the seller after work is completed. Together, they form a clear paper trail for both parties.
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Frequently Asked Questions
Do freelancers need to issue purchase orders?
Usually no. Purchase orders are issued by buyers, not sellers. As a freelancer, you receive POs from clients and then reference them on your invoices. You would only issue a PO if you are purchasing supplies or subcontracting work.
What should I do if a client requires a PO number on my invoice?
Ask for the PO number before starting work and include it prominently on your invoice — usually near the top alongside the invoice number and date. This ensures smooth processing by their accounts team.
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