A Purchase Order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It serves as an official offer to buy products or services. Once accepted by the seller, it becomes a legally binding agreement between the two parties for the sale.
A PO details the specifics of the purchase, including descriptions of the items, quantities, prices, payment terms, and delivery dates. It is typically used to initiate a transaction and helps both parties track and manage the ordering process. Sellers use the PO to fulfill the order while buyers use it to confirm that the goods received match what was ordered.
Purchase Orders are crucial for managing business finances, ensuring order accuracy, and maintaining clear records for accounting and inventory control. They help businesses keep track of their spending and manage budgeting more effectively. POs also provide legal clarity and security for transactions, which is particularly important in resolving disputes and ensuring compliance with contractual obligations.
