Purchase Order (PO): Meaning, Format, Process & Free Generator
A purchase order (PO) is a document a buyer sends to a seller to confirm an order. It lists what is being bought, the quantity, the agreed price and the delivery and payment terms. Once the seller accepts it, it becomes a binding commitment for both sides.
Where it fits in the buying process
- The buyer asks for prices: a request for quotation (RFQ).
- The seller replies with a quotation.
- The buyer approves and issues a purchase order.
- The seller delivers the goods with a delivery challan or invoice.
- The seller sends the tax invoice and the buyer pays.
What a purchase order should include
- PO number and date (use a sequence such as PO-2026-001)
- Buyer details: name, address, GSTIN
- Supplier details: name, address, GSTIN
- Item description, HSN/SAC, quantity, unit and agreed rate
- GST rate and total amount
- Delivery address and expected delivery date
- Payment terms (advance, credit days)
- Warranty, inspection or penalty clauses if relevant
- Authorised signature
Purchase order vs invoice vs quotation
| Document | Sent by | Purpose |
|---|---|---|
| Quotation | Seller | Offer of price and terms |
| Purchase order | Buyer | Confirms the order |
| Invoice | Seller | Asks for payment |
Read quotation vs invoice vs proforma for the seller side.
Why a PO matters
- It avoids arguments about price and quantity.
- It is a record for accounts and audit.
- It lets suppliers confirm the order and plan stock.
- It helps match the PO, delivery and invoice before payment (three-way matching).
Create a purchase order free
Use our purchase order generator. Add items, GST and terms, preview it and download a PDF or Excel file in a minute. No signup needed.