A purchase order, or PO, is a formal request a buyer issues to a supplier, spelling out the goods or services wanted along with quantities, prices and terms.
What a PO is
Once the supplier accepts it, a PO becomes a legally binding contract covering what will be delivered, when and at what price. Key components include a unique PO number, the date, vendor details, item descriptions, quantities and unit prices, the total, delivery details and payment terms. A PO starts the purchase; an invoice, sent later by the supplier, requests payment.
Why they matter
- Streamlines purchasing into a clear, repeatable workflow
- Provides legal protection and transaction clarity for both sides
- Helps finance teams forecast and stay on budget
- Builds supplier trust through a transparent approval process
The process and types
A typical flow runs from purchase requisition to PO creation, approval and dispatch, order fulfillment, goods receipt, invoice matching and payment. Common types include standard POs for one-time buys, blanket POs for recurring orders, planned POs when delivery dates are open, and contract POs that frame future orders.
The overlooked cost
Even a tight PO process leaks money to card fees. At 3%+ per transaction, a $10,000 order can cost $300 in fees alone. Cashswipe has installed software for thousands of businesses since 2023 to eliminate 80-100% of processing fees legally - keeping more of every purchase in the business.