What is the difference between a purchase order and an invoice?
Quick answer
A purchase order is the document a buyer sends a vendor to place an order: what, how many, at what price. An invoice is the document the vendor sends back asking to be paid for what it delivered. The PO comes first and commits the buyer; the invoice comes after and requests payment.
Last updated
Updated · By Robert Breen
Why it matters for a small business
The two documents look alike, with vendor names, items and amounts, so they get mixed up. The difference is direction and timing. The purchase order is yours: you send it before anything ships. The invoice is the vendor's: it arrives after delivery and starts the clock on payment.
Keeping both lets you check one against the other before paying. A simple made-up comparison: your PO orders 40 rolls of stretch wrap at $25 each, a total of $1,000. Only 28 rolls arrive. The invoice still bills 40 rolls for $1,000. Matching the invoice to the PO and the delivery shows the correct amount is 28 times $25, or $700, and you owe nothing for the 12 that never came.
In a real lesson: Build an AI Vendor Follow-Up Agent in n8n
The AI Vendor Follow-Up Agent lesson lives on the purchase order side. You build an n8n agent for Ridgeline Supply Co., a made-up warehouse and distribution business, and give it three open orders, including "Northwind Wrap, PO 4492, 12 rolls short."
The agent's rules tell it to "Name the PO number and what was ordered," state the problem in one sentence and ask one clear question: "a ship date, a tracking number, or a fix." It saves each follow-up to the Vendor Follow-Ups sheet.
The lesson stops before any invoice arrives, and its quantities and prices are not given, which is why the numbers above are invented. A logged shortage, though, is exactly what you need when Northwind's bill comes in: proof the PO and the delivery did not match, so the invoice should not either.
Try this lesson free or read the step-by-step guide.
Common confusions
Purchase order vs sales order
A purchase order is the buyer's document. A sales order is the seller's internal record of the same order, used to pick, pack and ship it.
Invoice vs receipt
An invoice asks for payment. A receipt confirms that payment was made. Neither one is the original order.
Tips
- Ask vendors to print your PO number on every invoice.
- Compare the invoice to the PO before you approve it: items, quantities, prices and terms.
- For goods, also check what was received. See the three-way match.
Related terms
More Business terms
Where you use it: free lessons
- Build an AI Vendor Follow-Up Agent in n8n (n8n, 12 min)
- AI Receipt Extractor: Receipts to Google Sheets with n8n (n8n, 12 min)
More free tutorials
Frequently asked questions
- Which comes first, a purchase order or an invoice?
- The purchase order. The buyer sends it to place the order. The vendor delivers, then sends an invoice for what was delivered, ideally quoting the PO number so the two can be matched.
- Is a purchase order a legally binding contract?
- Once a vendor accepts it, a PO can form a binding agreement on its terms. The details depend on the wording and local law, so ask a lawyer about large or unusual orders.
- Can an invoice be different from the purchase order?
- Yes, and that is why you compare them. Prices change, orders ship short or extra items appear. Hold payment on the difference and ask the vendor for a corrected invoice or a credit memo.