Difference between PO and non-PO invoice (9) | Saldoinvoice.com

Difference Between PO and Non-PO Invoice

Business document flow consists of a variety of papers. The most important for self-employed and independent suppliers are invoices. However, some inexperienced entrepreneurs often confuse them with purchase orders (PO), which is fundamentally wrong. The latter are pre-order forms that a buyer fills out and hands over to a seller. That is, they precede the provision of goods and services and, accordingly, the issuance of bills. Depending on whether you received a PO for an invoice from a client or not, the document processing is slightly different. Let’s consider all the nuances in more detail.

What Is a PO Invoice?

As you understood from the introduction, purchase order and invoice processing go precisely in this sequence. First, you get a preliminary list of products that a customer would like to order, provide them with everything they need, and, based on it, issue a bill demanding compensation for the work performed. With this sequence, you should make an invoice, considering the data specified in the PO.

What does a PO mean in a business? While purchase orders are not required forms, they do have certain benefits for your business and clients. They provide maximum accuracy, allowing you to manage inventory and budget more efficiently. You know what an orderer wants and can quickly assess whether you meet their requirements. With the information provided in POs, you can also optimize the packaging and delivery of goods. Moreover, this type of paper simplifies PO invoice processing since you already have all the necessary data.

What does a PO number mean on an invoice? It serves as a link between two documents. Thus, all papers generated and the data in them (including delivery info) will converge in accounting records. If we talk about compensation for work performed, PO payment terms should also be prescribed. However, it doesn’t mean you should expect to get money after receiving a purchase order. Payment always follows after the provision of goods, services, and invoices.

Non-PO Invoice Meaning

The non-purchase order definition implies a bill issued without a pre-provided PO. Items pre-ordering is optional, and some companies skip this step. Typically, it happens in businesses that provide services at an hourly rate. As a basis for creating such an invoice for payment, you take a contract and an invoice template printable. The form should include all information about the tasks performed, contact data of a customer and contractor, and payment terms and methods.

Why are invoices important for a business?

PO and Non-PO Invoice Processing Steps

Non-PO and PO bills practically don’t differ in their content; the key fields remain the same. However, there is a difference in processing these types of documents. The presence of a PO means that a company or buyer has read your terms and conditions, agreed with them, and is ready to place an order. That is, a client approved a PO. Some view purchase orders as pre-approved invoices. After receiving the bill itself, customers pay within the agreed time.

In the case of non-PO bills, they still have to go through an approval process within the buying company. As soon as the accounting department makes sure that everything is in order, the invoice is transferred further for booking and the compensation for the services and products offered. In the case of large-scale and multi-stage projects, it’s fraught with errors and extra checks, which in turn delays the receipt of payment to your account. If you want to receive money for your work on time, it’s recommended to ask for purchase orders. Fortunately, modern business solutions like SaldoInvoice allow you to reduce all inaccuracies to a minimum.

What is Invoice Processing?
Radomir Novkovich
Co-founder of Saldo Apps. His core competencies include product management, mobile app marketing, financial advertising, and app store optimization.
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