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What is a PO (Purchase Order) Number?

What is a PO (Purchase Order) Number?

Purchase orders are a vital cog in the activity of businesses and buyers. But what is a purchase order (PO) number? And why are purchase orders so important to business operations, as well as consumers? Read on to learn more about PO numbers and their use in business.

What is a PO number?

A PO number, or purchase order number, is a specific reference code that's assigned to a purchase so that it can be tracked throughout the order process. PO numbers are found on purchase order documents and are legally binding, helping both the business and the buyer reference their orders easily.

Why is a purchase order number important?

Purchase order numbers are important in a number of ways, particularly for administrative and financial sectors of a business. These reasons include:

  • Helping businesses keep track of their orders and easily identify them in their system
  • Ensuring businesses can track spending and budget for future orders
  • Easily managing inventory and keeping track of what needs to be ordered
  • Resolving issues with suppliers and customers
  • Streamlining business operations and improving efficiency

The legally binding aspect of PO numbers and purchase orders are also why they’re so important, as it ensures the security of all parties involved, essentially creating a contract between the buyer and seller.

What is the difference between a PO number and invoice number?

A purchase order number and invoice number are two different things, despite often sitting next to each other on invoices. An invoice number (or invoice ID) is similar to a PO number in the sense that it’s a unique reference code. However, the invoice number is used to identify and track the payment of a purchase, rather than the purchase itself.

What is a purchase order?

A purchase order is an official document that is issued by a buyer to a seller, indicating the type of products purchased, quantity, and agreed upon price for goods or services. A purchase order number is included on a purchase order, as well as other information that keeps track of the purchase, such as payment terms and delivery details.

What’s the difference between a purchase order and an invoice?

A purchase order is a request from a buyer to a seller to provide a product or service, whereas an invoice is a request for payment for a product or service that has already been provided.

The main difference between a purchase order and an invoice is that a purchase order is issued before the product or service is provided, while an invoice is issued after the product or service has been provided.

Purchase orders and invoices can be difficult to keep organised, particularly in large quantities. Shredall SDS Group’s document management software can help your business stay organised by providing a central repository for all purchase order related information.

How to create a PO number system

If you’re a small business dealing with a few orders, creating a PO number system to track your orders can be relatively simple. You can create your own purchase order templates and manually assign the PO number to new documents with every new transaction.

The purchase order number you create can be a mix of numbers, letters and dashes, arranged in a way to suit your business and your processes. For example, your first PO number could be ‘PO00001,’ increasing to ‘002’ and so on and so forth. And if you need to be even more specific, you could even add in the date of the purchase to make it a longer, more detailed purchase order number.

If your business is processing lots of orders a day, a manual PO number system may become overly complicated and impractical. This is where an automatic solution, such as a cloud-based software, may be better at automatically assigning PO numbers to purchase orders.

Where should I put a purchase order number on an invoice?

A purchase order number is predominantly placed on the top of an invoice, to allow for anyone handling the document to quickly and easily be able to identify the order. The specific location of your purchase order number will depend on the template that your company uses.

Here is an example of a simple invoice, with the purchase order number highlighted in red in the top right corner:

How we can help your business with purchase orders

Here at Shredall SDS group we can help review and analyse your existing paper documents and electronic processes to increase your business’s efficiency. Our document scanning services help to reduce manual data entry and processing, saving time and money for your business. Whilst our document management software can automatically extract key information such as purchase order numbers and invoice numbers, so that your team can find them with ease.

Get in touch today to find out how we can help your business.

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