A purchase order (PO) is a document a buyer sends to a supplier to request goods or services. It lists what the buyer wants, how many, at what price and when it should be delivered. In wholesale distribution, retailers, restaurants and other businesses send POs to their distributor, which then processes them into sales orders.
Once the supplier accepts a PO, it becomes a record of what both sides have agreed. It helps the buyer control spending and gives the supplier a clear instruction to act on.
What a purchase order includes
- PO number unique to the buyer
- Buyer details such as company name, billing and delivery address
- Supplier details
- Order date and requested delivery date
- Line items with product description, the buyer’s item code or the supplier’s SKU, quantity and unit of measure
- Unit price and line totals
- Payment terms
- Delivery instructions such as dock times or contact names
How suppliers receive purchase orders
Distributors rarely receive POs in a single format. Common ones include:
| Format | Notes |
|---|---|
| PDF attachment | Produced by the buyer’s system, with layouts that vary by customer |
| Email body | Free text, often short and informal |
| Fax | Scanned, sometimes handwritten |
| EDI 850 | Structured electronic PO, common with larger retailers |
| Web portal | Entered by the buyer on the supplier’s site |
| Phone or text | Verbal or informal orders that the supplier writes up |
Varied formats are one of the main reasons order desks are busy. PDFs alone come in countless layouts. This guide explains how automated PDF order capture into the ERP removes rekeying.
Purchase order vs sales order
The buyer creates the purchase order. The supplier creates the sales order in response. The PO uses the buyer’s language, such as their own product names and item codes. The sales order uses the supplier’s SKUs, pricing and terms. Turning one into the other accurately is the main job of the supplier’s order desk.
Purchase order vs invoice
A PO is sent before goods are supplied, to request them. An invoice is sent after, to request payment. Suppliers and buyers often match the PO, delivery note and invoice to check everything agrees.
How suppliers process a purchase order
- Receive the PO through any channel
- Read the details and identify the customer
- Match each item to a SKU
- Validate prices, quantities and stock
- Resolve any problems with the buyer
- Create the sales order in the ERP
- Acknowledge the PO so the buyer knows it is accepted
Common purchase order problems for suppliers
- Buyer item codes that do not match the supplier’s SKUs
- Old or incorrect prices on the PO
- Units of measure that are unclear
- Items that are out of stock or discontinued
- Handwritten or low-quality scans
- Layout changes that break template-based tools
Template-based OCR and document tools often struggle with the last two. These alternatives to intelligent document processing for order entry handle varied PO formats without templates.
How Ordana helps
Ordana processes purchase orders in every format distributors receive. The Ordana Desk Agent reads PDF, email, fax and EDI POs with no templates to set up, and matches the buyer’s item descriptions to your SKUs. It checks prices, quantities and stock against live data.
If a PO has a problem, such as an out-of-stock line or a price that does not match, the agent contacts the buyer, agrees a fix and then writes the sales order into your ERP. The buyer receives a confirmation once the order is closed.
Schedule a demo to see Ordana process your purchase orders.
Frequently asked questions
Is a purchase order legally binding?
A PO usually becomes binding once the supplier accepts it, though this depends on your terms and local law.
Who issues a purchase order?
The buyer issues it to the supplier.
What is a PO number used for?
It lets both sides track the order and match it to deliveries and invoices.
Can a purchase order be changed after it is sent?
Yes, the buyer can send a change order or revised PO, which the supplier then needs to confirm.
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