A purchase order (PO) is a document a business sends to a supplier to order goods. It lists the products, quantities, agreed prices and delivery details, and becomes the reference that the delivery and invoice are checked against.
In an inventory system, a PO is created, approved and sent to the supplier. When goods arrive, staff receive them against the PO, which updates stock and flags any shortfalls or price differences before the invoice is paid.
Retailers use POs to control spending, track what is on order and keep a clear record for accounting. Suggested orders based on sales and stock levels can speed up the process.
Common issues are receiving goods without a matching PO, unrecorded back-orders and invoices that do not match. Integrating purchasing with inventory and accounting software reduces double entry and errors.