The documents like purchase order and sales order depict purchase transactions and sales taking place in a business. But clarity regarding sales order vs. purchase order is necessary. When the buyer requires a product, they create a purchase order on the seller or the material supplier. This purchase order consists of product/services, price, quantity, and other terms and conditions. A sales order is a document issued by the seller or supplier of the material confirming that the product ordered in the purchase order is being delivered to the buyer.
What’s a PO?
A PO is a short form of the purchase order. A purchase order is issued to the supplier by the buyer. It contains details regarding the desired product, price, quantity (in units), delivery time, address, and other terms and conditions.
What Are The Types Of Purchase Orders?
There are four purchase order types: standard purchase order, blanket purchase order, planned purchase order, and contract purchase order.
Standard Purchase Order
This is the most common purchase order for one-time charges. As it is a one-time order, the purchase order consists of specific information on the products/services desired.
Blanket Purchase Order
A blanket purchase order states the agreement between buyer and seller for future purchases in which the quantity of product is unknown.
Planned Purchase Order
This purchase order is similar to standard purchase order as it consists of specific information regarding the product/services. When a planned purchase order is raised, it is very particular about the delivery time and address. The supplier is supposed to deliver the material at the said time and address. This purchase order is repetitive and is raised when there is a requirement for the product/service.
Contract Purchase Order
A contract purchase order states the terms and conditions negotiated between the buyer and seller. This negotiation may be related to future purchases.
What Is The Difference Between Purchase Orders Vs. Invoices?
A purchase order is a document issued by a buyer to a seller or supplier. A purchase order consists of all the details related to the product desired from the seller along with the price, quantity, delivery time, delivery address, and other terms and conditions, including the payment factor.
An invoice is a financial document considered for recording in accounting books. This invoice is issued by the seller or supplier to the buyer and consists of all the details mentioned in the purchase order and the tax collected details. An invoice is created after delivering the ordered material and confirms that a particular amount is due for payment. Sometimes complete or part payment is collected from the buyer as advance payment. Even in that case, an invoice is raised as part of the accounting process.
In order to make the best decision for your business, it’s important to understand the difference between purchasing and sales orders. Hopefully this blog post has helped clear things up for you. If you have any questions or need help getting started with either type of order, don’t hesitate to get in touch with us. We’re here to help your business grow!
Recommended: What is Subscription eCommerce?