Purchase Order

A purchase order is a document or reference number a buyer sends to a supplier to confirm what has been ordered.

A purchase order, often shortened to PO, sets out the goods or services requested, quantities, prices, delivery details, and terms before the supplier issues an invoice.

It is not the same as a tax invoice. A purchase order comes from the buyer and helps control spending. An invoice comes from the supplier and asks for payment.

Where Purchase Order Appears

You will usually see purchase orders in:

supplier ordering workflows
quote acceptance and job approval
accounts payable review
invoice matching and approval
stock or item purchasing
customer requests for a PO number on invoices

For GST claims, the supplier still needs to provide the right invoice or tax invoice where required. The ATO’s tax invoice guidance explains what a tax invoice needs to show.

How Purchase Order Works In Practice

A purchase order creates a clear buying record before money leaves the business. When the supplier invoice arrives, the accounts team can match it against the PO and check whether the price, quantity, supplier, and delivery details make sense.

This is useful in accounting software because it turns purchasing into a controlled workflow: order, receive, match, approve, pay, and reconcile.

Simple Example

A cafe orders a new coffee grinder for $1,650. The owner sends PO-203 to the supplier. The supplier later sends an invoice for $1,650 and includes PO-203 on the invoice.

Because the invoice matches the purchase order, the owner can approve it with more confidence. If the invoice says $1,950, the PO gives the owner something concrete to query.

Why Purchase Order Matters

Purchase orders reduce confusion before bills arrive. They help prevent unauthorised spending, duplicate orders, incorrect prices, and disputes about what was agreed.

They also make reporting cleaner. If purchase orders are linked to suppliers, items, jobs, and bills, it is easier to understand commitments before the bank account changes.

Easy Way To Remember It

A purchase order says “we agree to buy this”. An invoice says “please pay for this”.

How Gimbla Can Help

Gimbla supports purchase-order-aware workflows alongside invoices, bills, customers, suppliers, items, and bank reconciliation. That helps purchasing records stay connected from the order through to payment.

Helpful Gimbla Guides

In Short

A purchase order records what the business agreed to buy before the supplier invoices it. It helps control spending and makes bill approval easier.