Purchase Order (PO)
A commercial document issued by a buyer to a seller indicating the types, quantities, and agreed prices for products or services.
Definition
A Purchase Order (PO) is a legally binding document that a buyer sends to a supplier to authorize a purchase. It specifies quantities, descriptions, prices, delivery dates, and payment terms. Once accepted by the supplier, it becomes a contract between the parties.
Why It Matters
POs provide spending control, create audit trails, and enable accurate 3-way matching. Without POs, organizations struggle to control spending and verify that invoices are legitimate.
Examples
Creating a PO
Purchasing creates PO #12345 for 500 widgets at $5 each from Supplier ABC, totaling $2,500.
Blanket PO
A blanket PO authorizes $100,000 in purchases from a supplier over 12 months without individual POs for each order.
How Nexus AP Helps
Nexus AP integrates with your ERP to pull PO data for matching. AI matches invoices to POs even when invoice details don't perfectly match PO format.
Start Free TrialFrequently Asked Questions
Do all invoices need a PO?
Not necessarily. Many companies have "non-PO invoices" for recurring expenses like utilities or services. However, POs provide better control and are required for most material purchases.
What is a blanket PO?
A blanket or standing PO covers multiple deliveries over time up to a specified amount, useful for recurring purchases from the same supplier.
Category
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