P.O Definition

A purchase order (PO) is a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from external suppliers. A PO is usually initiated by the buyer, who then sends it to the supplier with whom they have an agreement.

The supplier then reviews the PO and, if everything looks correct, they will confirm their receipt of the order by sending what’s called an ‘acknowledgement.’ This acknowledgement typically contains information about delivery date and terms. After both parties have received and reviewed the acknowledgement, the purchase order becomes a contract between them.