The short version
A purchase order is the buyer's commitment, raised before the work, and it carries a number. Put that number on your invoice, in the header, labeled PO. Without it a large company's accounts system cannot match the invoice to anything, and an unmatched invoice is not rejected. It is just never paid.
What a purchase order is
A purchase order is written by the buyer, not the seller, and it is written before the work rather than after it. It says: we are committing to buy this, in this quantity, at this price, delivered here, by then. The moment you accept it, both sides are holding the same piece of paper.
It exists because a company of any size cannot let every employee commit money. The purchase order is the point where the commitment is approved, and the number on it is the handle everything afterwards hangs on.
| Purchase order | Invoice | |
|---|---|---|
| Written by | The buyer | The seller |
| When | Before the work | After the work, or at a stage |
| Says | We commit to buy this | You owe us this |
| Carries | A PO number | An invoice number, and the PO number |
| Approved by | Whoever holds the budget | Matched, then paid |
Why the invoice is sitting there
Here is what happens inside a company that uses purchase orders. Your invoice arrives at a shared inbox. Software reads it, looks for a PO number, and tries to match it against an open commitment. If it matches, the invoice joins the next payment run with nobody making a decision at all. If it does not match, it drops into an exception queue.
The exception queue is the problem. Nothing in it is rejected, so nobody writes to you. It waits for a person to work through it, and that person has to find out who ordered the work, whether it was approved, and against which budget. That is a week if you are lucky.
The invoice is not late. It is invisible. This is why chasing does not work on a missing PO. A reminder puts the same unmatched invoice in the same queue. The fix is to ask for the number and send a corrected invoice carrying it.
Where the number goes
In the header block, next to the invoice number and the dates, labeled PO or PO / Ref #. Not in the notes, not in the email body, not in the description of a line item. Somebody is scanning for it in one specific place.
- Ask for it before you start. "Do you raise purchase orders? If so I will need the number before I invoice." One line in the acceptance email.
- Put it on the quote too. If the client's PO references your quote number, the two documents point at each other and the match is trivial.
- Quote it exactly. PO 88-2291 and PO88-2291 are the same to you and not always to their software. Copy it character for character.
- One invoice per purchase order, unless the PO explicitly covers stages. Splitting one PO across three invoices without saying so breaks the match on all three.
Three-way matching, briefly
Larger buyers compare three documents before paying: the purchase order (what was committed), the goods receipt or delivery note (what actually arrived), and the invoice (what is being charged). If the three agree, the payment is automatic.
This is why quantities matter as much as the number. A PO for ten units and an invoice for eleven fails the match even though the number is right, and it fails silently. If the job grew, get the purchase order amended or raise a change order against it before invoicing.
When you are the buyer
The same document works in the other direction. Raising purchase orders for what you buy in gives you three things worth having on a job of any size: a written price before the material arrives, a reference your supplier's invoice has to quote, and a record of what was committed against which job when the costing is done.
The purchase order tool writes one with a number, the supplier, the lines and the delivery details, and exports a PDF. Number them in their own sequence, separate from your invoices, because they are a different document doing a different job.
Clients with no PO process
Most small clients have none, and that is fine. The purpose of a purchase order is to prove the work was ordered by somebody entitled to order it, and an email saying "yes, go ahead, at that price" does the same job.
Keep it, and reference it on the invoice: "Per your email of 14 August" in the reference field. It costs nothing, and on the day somebody asks who authorised the work it is the whole answer.
When the PO number is missing, wrong or has run out
Almost every stuck invoice at a company of any size is one of four things, and none of them are resolved by sending the invoice again.
| What happened | What it looks like | What actually fixes it |
|---|---|---|
| No PO was raised | Accounts cannot match the invoice to anything | Ask your contact to raise one, then reissue with the number on it |
| The number is wrong or mistyped | The invoice is rejected without explanation | Ask for the correct number and send a corrected invoice, same job |
| The PO value has been used up | Part of the invoice is paid and part is not | The PO needs increasing before the balance can be paid |
| The work was outside the PO | The extra lines are queried, the rest goes through | A change order and a PO amendment, before the next invoice |
Ask for the number before the work starts, not with the invoice. A PO raised after the fact needs someone to justify why it is late, and that person is not you, which is why it takes weeks.
Long jobs and repeat work
On a job billed in stages, one PO usually covers the whole value and every invoice quotes it. Watch the running total: when the invoices to date approach the PO value, the next one stops rather than partly pays. Say so before it happens instead of chasing afterwards. Progress billing covers how to structure the stages.
For ongoing work a client may raise a blanket or standing order covering a period rather than a job. The number goes on every invoice in that period, and the same warning applies: it has a value and a date, and both run out.
The tools for this
Common questions
What is a purchase order?
A document the buyer raises before the work, saying what they are committing to buy and at what price. It carries a number, and that number is what their accounts system matches your invoice against.
What is the difference between a purchase order and an invoice?
The buyer writes the purchase order and it comes first. The seller writes the invoice and it comes after. The purchase order is a commitment to buy; the invoice is a request to be paid.
Where does the PO number go on an invoice?
In the header block with the invoice number and the dates, labeled PO or PO / Ref #. It needs to be findable at a glance, because somebody in accounts is looking for exactly that.
What happens if I leave the PO number off?
In a small company, nothing. In a large one the invoice cannot be matched to a commitment, so it is not approved, and usually nobody tells you: it simply does not get paid.
What is three-way matching?
The accounts process that compares the purchase order, the delivery or goods receipt, and the invoice. If all three agree, the invoice is approved without anyone having to make a judgment.
What if the client has no purchase order process?
Then there is no number to quote and the field stays empty. Ask for a written go-ahead instead, by email, and reference that on the invoice: it does the same job of proving the work was ordered.
What do I do if a client will not give me a PO number?
Find out whether their process requires one. If it does, the invoice will not be paid without it and no amount of chasing changes that, so the request has to go to whoever can raise it. If it does not, say on the invoice which person authorised the work and when, so accounts has something to match it against.
Should the PO number go on the quote as well as the invoice?
Yes, once you have it. The same reference on the quote, the work order and the invoice lets anyone on the client's side follow the job through their own system without asking you for a copy of anything.