Purchase order

A purchase order, often abbreviated to PO, is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services required. It is used to control the purchasing of products and services from external suppliers. Purchase orders can be an essential part of enterprise resource planning system orders.

A Purchase Order serves as a formal offer to purchase and, upon acceptance by the seller, may create a legally binding contract between the parties.

Purchase orders are commonly used in business-to-business transactions as part of procurement and supply chain management processes.

A typical purchase order includes details such as item descriptions, specifications, delivery dates, payment terms, and shipping instructions. Organizations use purchase orders to authorize spending, maintain internal controls, and create an audit trail for financial and inventory management purposes.

An indent is a purchase order often placed through an agent (indent agent) under specified conditions of sale.

The issue of a purchase order does not itself form a contract. If no prior contract exists, then it is the acceptance of the order by the seller that forms a contract between the buyer and seller.