Purchase Order (PO)

A buyer-issued document that authorizes a vendor to deliver specified goods or services at agreed prices.

POs are common in procurement-mature organizations because they tie spend to a budget line, an approval chain, and an accounting code. Vendors usually require a PO number on the invoice. POs reduce maverick spend (purchases made outside the procurement process) but add friction and sometimes delay the contract signature. Most modern procurement tools generate POs automatically once a contract is approved.