Difference Between Purchase Order and Invoice

Self-employed persons create and process a wide variety of different paper types. Some of them are easy to get confused about as they look similar. We’ll compare purchase orders vs. invoices and tell you why they are needed, in what situations they should be applied, and how to manage payments using them.

What Is an Invoice?

Freelancers, independent contractors, and vendors use invoices to receive money for the services and products rendered. These specialists make invoices online or offline and hand them over to purchasers upon completion of tasks. Your documentation should be properly formatted and well-organized to look professional. What should be included on an invoice? A typical form consists of the following points:

• the creation day and the due date for payment;
• your business details;
• customer contact info;
• a list of work performed with an indication of a unit or hourly rate and volumes;
• fees, taxes, discounts, and shipping costs;
• available payment options;
• additional notes and instructions.

What are invoices used for? With their help, you not only get paid for your activities but also protect yourself from unscrupulous clients. Reports based on your files allow you to monitor income and expenses, analyze your business, and plan the budget and further company expansion. Using Saldo Invoice in your work will simplify the generation of the necessary papers. With the help of our service, it is possible to create files on any device and on the go. Convenient and straightforward functionality makes template creation quick and easy.

How Does a Purchase Order Work?

The invoice and purchase order are compared because they contain almost similar information. To avoid mixing up, you should understand the purpose of both forms of documentation. Unlike a Word, Excel, or PDF invoice template, POs are used by clients rather than suppliers. With their help, purchasers indicate what goods and services and in what volume they want, as well as in what period they can deposit money. This kind of document is a formal agreement between a seller and a buyer, and on its basis, a supplier can issue an invoice.

Main Differences and Similarities in Invoices and Purchase Orders

These two types of paper have common characteristics:

• They indicate the same information regarding a customer, performer, products, and the total amount;
• Both documents are considered legally binding within the purchasing processes;
• They also allow both sides to control their budgets better and monitor the implementation of all agreements.

Otherwise, these are different docs that are utilized for diverse purposes:

• POs use purchasers to state their expectations and define purchasing order;
• Vendors and contractors need invoices to demand money for items provided;
• While POs are made in advance, invoices are issued after the job is done;
• POs indicate the timing of a request, and invoices specify the payment timing.

Determining which form you need is easy. If you want to place a request for the execution of works or product delivery, get a purchase order. If you are a performer who offers customers services or items and want to get paid for your activities, opt for an invoice.