Purchase order vs Invoice vs Receipt
When a buyer places an order with a seller, it does so with a Purchase Order.
A Purchase Order (PO) is a document sent by a purchaser to a supplier that details the description and quantity of goods, prices, order placement and shipping dates, any discount terms, Freight on Board FOB information, and a signature of the approving authority. This document is considered legally binding after the supplier accepts it as it shows the buyer’s promise to buy the mentioned goods and services. Purchase Order software is usually employed to track the status of POs.
As the supplier dispatches the goods, it sends an invoice to the buyer. This invoice shows the due payment. Invoices are compared to PO and Goods Receipt Note in a process of three-way matching before the payment is dispatched.
As the seller receives the payment, they send over a receipt for record-keeping purposes. This receipt is not intended for any future use but is proof of a completed transaction.
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