Purchase Order (PO)

A purchase order represents a commercial document issued by a buyer formally requesting a seller to supply specific products, services or solutions per pricing and terms agreed upon. Issuing a PO signifies the buyer’s intent to purchase.

For large or complex sales, finalizing a purchase order means the deal is effectively completed. Signed POs enable sales revenue recognition and trigger order and fulfillment processes. Automating PO administration can smooth order management.

However purchase orders for simple orders are increasingly being replaced by instant online transactions or contracts. But in contractual B2B sales, procurement still relies heavily on formal POs to track approvals, drive compliance, measure spending, and bind deals.