Definition
A buyer's document authorizing a purchase at agreed prices and quantities.
Why it matters
A confirmed PO is the foundation of PO financing.
Where it shows up in a deal
The PO is the buyer's authorization and the anchor of the three-way match between order, delivery and invoice. In PO financing the funder reads it closely before approving anything; in receivables financing it is the document verification checks the invoice against when the customer's AP team is asked to confirm the amount.
What it affects
- A PO number mismatch between order, POD and invoice is a routine cause of verification delay.
- Cancellation, inspection and set-off clauses on the buyer's standard terms decide how strong the resulting receivable is.
- Blanket POs with releases need the release documents too, not just the master order.
- Unilateral quantity or price amendments after production has started can strand supplier cost.
The common mistake
Related terms
- Purchase Order FinancingFunding that pays a supplier so a business can fulfill a confirmed customer order.
- InvoiceA bill requesting payment for goods or services delivered.
- VerificationThe process of confirming an invoice with the customer before funding.
- Proof of DeliveryDocumentation proving goods or services were delivered.
Questions about how purchase order affects your facility?
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