Is there a difference between an Invoice and a Purchase Order?
In the very large and sometimes treacherous world of accounting, there are many terms, software programs, bills and receipts to keep track of - ask any accountant or billing department, and they’ll nod their head in agreement.
So why then are we going to spend time talking about something as trivial as an invoice or a purchase order? Well, believe it or not, these two terms are quite possibly the most mistakenly interchangeable terms in the entire industry. There is a large difference between an invoice and a purchase order, and it basically comes down to this - an invoice is a document issued by a seller to a buyer, and a purchase order is a document issued by a buyer to a seller.
Normally, invoices are sent as ‘after the fact’ documents for money that someone owes someone else in return of goods or services provided. The exchange of goods for services has already taken place, or services have already been performed, and now, money must be collected. Invoices aren’t negotiations or requests - they are requests for payment for services rendered.
On the other hand, Purchase Orders are ‘before the fact’ documents for products, services, or quantity that the seller of a good or service will provide to a buyer. When a purchase order is sent out, no money is owed to anyone and no services have been performed. The buyer must first agree to the price and terms of the Purchase Order before anything happens. Unlike an invoice, a purchase order resembles a stage in the negotiation process.
As we mentioned earlier, these two very different types of documents - Invoices and Purchase Orders - are very often used as one in the same by many individual contractors and businesses. A lot of times, invoices are sent out as estimate requests, and purchase orders are sent out to collect money. It may not seem like a big deal - that is, until you haven’t received your payment or your products or services! Normally, invoices and purchase orders are legally binding documents, and the absence or mixed use of said documents can prevent you from collecting your hard-earned money. We can’t think of a better reason to use Abakoos Invoicing Software, for this reason as well as many others. Our software solutions ensure you send out the right document in a professional manner so you can get paid for your hard work.
