What is a purchase order?
A purchase order (PO) is a document a buyer sends to a seller authorizing a purchase. It includes items, quantities, prices, and delivery terms. The PO becomes a binding contract once accepted by the vendor.
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Free Purchase Order Template
Free purchase order template for B2B procurement. PO numbers, delivery terms, line items, payment terms. Three-way matching ready, instant PDF.
Last updated: May 10, 2026
Free Purchase Order Template (PDF, B2B Standard)
A purchase order (PO) is what a buyer sends to a seller, saying "we'd like to buy these things at these prices." It comes BEFORE an invoice. The PO is created by the customer; the invoice (referencing the PO) is created by the supplier.
Quick answer: A PO authorizes a purchase. It includes PO number, buyer/seller details, items, quantities, prices, delivery terms, and payment terms. Generate a PO free by changing the title from "Invoice" to "Purchase Order".
What's on a Purchase Order
- Title: "Purchase Order" or "PO"
- Unique PO number (PO-2026-001)
- Issue date
- Required delivery date
- Buyer details (your company)
- Vendor/supplier details
- Ship-to address (if different)
- Bill-to address
- Itemised list with descriptions, quantities, prices
- Subtotal, tax, total
- Delivery terms (FOB, CIF, etc. for international)
- Payment terms (Net 30, etc.)
- Special instructions
- Authorisation signature
The Three-Way Match (Why POs Matter)
Larger companies use "three-way matching" before paying invoices:
- Purchase Order (PO): What was ordered
- Goods Receipt Note (GRN): What was actually delivered
- Invoice: What's being charged
If all three match, the invoice gets approved for payment. If they don't, finance investigates. This catches fraud, over-billing, partial deliveries, and pricing errors.
PO vs Invoice (Direction Matters)
| Aspect | Purchase Order | Invoice |
|---|---|---|
| Created by | Buyer | Seller |
| Sent to | Vendor | Customer |
| Purpose | Authorize purchase | Request payment |
| Timing | Before goods/services | After goods/services |
| Numbering | PO-XXX | INV-XXX |
When to Use Purchase Orders
POs are common in:
- B2B manufacturing and wholesale
- Government procurement (mandatory in most cases)
- Large companies (over 50 employees usually)
- Recurring supplier relationships
- Capital expenditure approvals
- International trade
POs are less common in:
- Freelance/consultant relationships (typically just contract + invoice)
- Small B2B retail purchases
- B2C consumer purchases
How to Number POs
Standard formats:
- PO-001, PO-002 (simple sequential)
- PO-2026-001 (year prefix)
- PO-DEPT-001 (departmental)
- Custom internal codes
Linking PO to Invoice
When the supplier eventually invoices, they should:
- Reference the PO number on the invoice ("Per PO-2026-001")
- Match line items to the PO exactly
- Match prices to PO (any discrepancy needs justification)
- Match delivery terms
If you're a supplier and your customer requires POs, ALWAYS request and reference the PO number on your invoice. Otherwise their accounts payable will reject the invoice.
How to Generate a Purchase Order
Use the free generator:
- Change document title to "Purchase Order"
- Add PO number (PO-2026-001)
- Set "From" as YOUR company (the buyer)
- Set "To/Bill to" as the supplier/vendor
- List items, quantities, agreed prices
- Add delivery date and special instructions
- Sign and download PDF
- Send to vendor for confirmation
Common PO Mistakes
1. No PO number. Hard to track without unique reference.
2. Vague descriptions. "Office supplies, $200" leads to disputes about what was actually agreed.
3. Missing delivery date. Vendor delivers whenever, you complain. PO should specify by-when.
4. No payment terms. Net 30 vs Net 60 makes a big difference.
5. Not getting vendor acknowledgment. Best practice: vendor signs and returns the PO accepting it.
Related Pages
Frequently Asked Questions
Who creates the purchase order, buyer or seller?
The buyer creates the PO and sends it to the seller. This is the opposite direction from an invoice (which the seller creates and sends to the buyer). PO comes first; invoice comes after delivery.
Do freelancers use purchase orders?
Usually not. Freelance work is typically governed by a contract or proposal, then directly invoiced. POs are more common in larger companies with formal procurement processes, manufacturing, and government work.
What's three-way matching?
A control process where finance compares the PO (what was ordered), goods receipt (what was delivered), and invoice (what's billed). All three must match before payment is approved. Catches errors and fraud.
How are PO numbers different from invoice numbers?
POs use a separate numbering sequence (PO-001, PO-2026-001) to avoid confusion with invoices (INV-001). The PO number gets referenced on the eventual invoice for matching.
Can I generate a PO using FreeInvoicePDF.org?
Yes. Use the invoice generator and change the document title to 'Purchase Order'. Set yourself as the issuer (buyer) and the supplier as the recipient. Add PO number, items, delivery date. Download PDF.
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