It’s all about maintaining balance. And the same can be implied when it comes to managing your business. 

Every trade goes through the billing and invoicing-related process, whether small or large business. A few terms such as ‘Purchase Order,’ ‘Invoice Estimates,’ etc., can sometimes confuse you and make mistakes in the business process.

But to be precise, invoice and estimate are different terms. Likewise, the purchase order and invoice process are different from one another. 

In business, you need to stay on top of your income and expenditure and create a perfect balance to yield growth. To know the details of your income and expenditure, you’ll have to rely on two sets of different documents, namely, purchase orders and invoices. These two documents represent different parts of this process and consist of information.

Hence, it is important to know these terms and remember their key differences. This informative purchase order vs invoice guide brings you the six key differences between purchase orders and invoices.

The invoicing process

Before we move ahead to the discussion between a purchase order vs invoice, let’s talk a bit about the basic invoicing process. 

In the invoicing process, the buyer prepares the purchase order document to show his intent for sale, implying that you wish to buy goods or services from the supplier. The seller then issues an invoice upon completing the job or service and confirms the price as per the purchase order, followed by the payment transaction for the same by the agreed terms.

Invoicing Process-purchase order vs invoice

In a broader sense, these two documents might look like similar information and mostly relate to the agreement set by the two parties. There is some common information which can be seen are as follows:

  • Cost
  • Item reference
  • Service(s)
  • Contact information

Download our Mobile App

Play store
App store
Play store
App store

Purchase orders

In this guide on purchase order vs invoice, let’s first understand what a purchase order is. Purchase orders are drafted documents representing a contract. It has all the information about the delivery terms of services or goods and the price. Sometimes, one can even find pre-requisites conditions agreed upon by both sides before forming a contract in a few purchase orders.

Let’s glance at the standard purchase order information before moving ahead to the purchase order and invoice process.

purchase order vs invoice

A standard purchase order generally consists of the following information

  • Order date
  • P.O. number
  • Product details ordered
  • The contact information of a buyer
  • The contact information of a seller
  • Terms and conditions
  • Signature of issuing authority

Invoices

While purchase orders are created at the beginning of the trade, invoices that indicate the confirmation of sale are drafted later upon completion of the job. It also marks payment initiation or financial transaction to close the particular trade between buyer and seller. Invoices represent the purpose of a seller to get paid as per the terms mentioned and agreed. Invoices usually list the payment type and method with the buyer’s information. It also specifies the amount owed, payment date, and due date.

Below are the basic invoice essentials of a commercial/standard invoice

While creating a professional invoice for sending it to your customer or client, you must ensure the key invoice essentials mentioned below. 

  • Invoice issue date
  • Invoice & P.O. number
  • Company logo
  • Seller’s name and address
  • Buyer’s name and address
  • Product/Service breakdown
  • Discounts/taxes
  • Total/Final amount due
  • Terms and conditions
  • Authorized signature
  • Payment summary
  • Payment due date

Does your invoicing app help you create purchase orders?

Purchase order vs invoice: Point of differences

The buyer prepares it. The seller prepares it.
Consist of products/services ordered by a buyer Consists of the price of goods, products, and services provided
Terms and conditions Terms and conditions
Order date Payment due date
Has P.O. number Has both P.O. and Invoice number
It might contain pre-requisite conditions Contains shipping/delivery details

Hope the six key differences between purchase order and invoice process help you understand the purchase order vs invoice. 

Also Read: Purchase Order: What It Is & How to Create One

Summary

Moon Invoice is the best invoicing platform that provides the latest features and functionalities to optimize your daily business tasks. The main advantage of the top online free invoice maker or best cloud invoice generator is that you don’t have to be an expert financial or any other sort of expert as they come with a simple, easy, and intuitive user interface.

Moon Invoice lets your business be on top of the competition with Instant Invoicing & Billing, Easy track of Payment & Notifications, and Accurate Insights & Reporting Data. A few amazing add-ons with Moon Invoice are that you can add & “Manage Multiple Businesses,” “66+ Professional PDF Templates“, “Import/Export & Print Utility,” and data backup “iCloud sync & MoonSync support.”

To end the battle between purchase order and invoice, get Moon Invoice. Using Moon Invoice, you can manage both purchase orders and invoice processes easily and quickly. Inquire more about our online invoicing software by downloading it on your respective device. Please write to us at support@mooninvoice.com for any queries or confusion. 

FAQ’s