A purchase order (PO) is a document issued by a buyer to formally request goods or services from a supplier under agreed terms. Once the supplier confirms the order, it becomes binding on both parties – and forms the basis for the invoice, delivery note and any subsequent dispute. Although UK law does not prescribe a specific format, a well-prepared purchase order prevents misunderstandings and protects both you and your trading partner.
What should a purchase order include?
For a purchase order to serve its purpose – providing legal and commercial certainty for both sides – it should contain the following details:
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The PO number should always be communicated to the supplier and quoted on the corresponding delivery note and invoice. This enables straightforward three-way matching – PO, delivery note, invoice – and significantly simplifies accounting on both sides.
When and why is a purchase order used?
A purchase order is not just a formality – it is a practical tool that protects both parties and brings structure to commercial relationships:
Legal certainty – An accepted PO creates a binding commitment. If the supplier fails to deliver what was ordered, or the buyer refuses to pay, the PO serves as evidence of the agreed terms.
Cost control and budgeting – POs give you a clear record of committed spend. Finance teams can track outstanding orders against budgets before the invoices even arrive.
Efficient document matching – The PO number links the order to the delivery note and invoice, creating a clean audit trail. Many accounting systems automate this three-way match.
Professionalism – Issuing a formal PO signals that your business operates systematically. Suppliers take PO-backed orders more seriously and prioritise them accordingly.
Dispute resolution – If there is a disagreement about what was ordered, when, or at what price, the PO is the first document both parties refer to.
Even as a sole trader or small business, purchase orders are worth using – especially for larger orders or new suppliers. They don't have to be complicated: a simple document identifying both parties, specifying what you're ordering and at what price is enough to protect you if something goes wrong.