What is a purchase order (PO)?
A purchase order (PO) is a document a buyer sends a supplier listing the items, quantities, prices and terms it agrees to pay for, creating a record to match invoices against.
In more detail
The PO anchors procure-to-pay. It is created after a requisition is approved and gives the budget owner control before money is committed. Later, the supplier's invoice is matched against it. Companies differ on what needs one. Some require a PO for everything above a threshold, others only for goods, which leaves invoices for services arriving 'no-PO' and needing manual coding and approval. Automation helps on both sides: creating POs from approved requisitions, and routing no-PO invoices to the right approver. Weak PO discipline is a more common cause of slow AP than the matching software.
Example
A facilities manager requests 20 chairs. After approval, the system issues a PO with the item, quantity, agreed price and delivery date. Three weeks later the invoice arrives and matches without anyone retyping it.