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Purchase order number
Give every PO its own unique reference so it can be tracked and matched against later paperwork.
Polar Purchase Orders
Purchase order template UK — know what you’re buying before the bill arrives.
Learn how to create a purchase order, what information a PO should contain and how small businesses can use purchase orders to control spending, organise suppliers and match purchases to bills.
What is a purchase order?
A purchase order puts the agreement on paper before money leaves the business.
A purchase order — usually shortened to PO — is a document a business sends to a supplier setting out the goods or services it wants to buy.
It normally records the supplier, what is being ordered, quantities, prices, delivery information and relevant payment terms.
That gives both sides something clear to work from and gives your business a record of spending it has committed to before the supplier invoice arrives.
A bill tells you what a supplier wants paying. A purchase order records what you agreed to buy first.
That small difference can give a growing business much better control over spending.
Purchase order template
What should a purchase order include?
A simple PO needs enough information for your business and the supplier to understand exactly what has been ordered and on what terms.
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Your business details
State which business is placing the order and include the relevant contact information.
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Supplier details
Identify the business or supplier that should fulfil the order.
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Products or services
Describe clearly what you are buying so both businesses understand the order.
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Quantity
Record how many units, hours or other relevant quantities are required.
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Agreed prices
Include unit prices and totals where known so the financial commitment is clear.
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Delivery details
State where and when goods or services should be delivered where relevant.
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Payment terms
Record important agreed payment terms so they can be checked when the bill arrives.
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VAT and total
Where applicable, make the expected VAT treatment and overall order value clear.
Purchase order example
A small-business PO does not need to become a procurement thesis.
The goal is a clear record that the supplier can understand and that your business can find again later.
Use consistent PO numbers and enough detail to match the supplier’s eventual invoice against what was originally ordered.
PURCHASE ORDER
Buyer
Example Business Ltd
Business Address
United Kingdom
Supplier
Example Supplier Ltd
Supplier Address
United Kingdom
| Description | Qty | Price | Total |
|---|---|---|---|
| Example materials | 10 | £25.00 | £250.00 |
Order total: £250.00
Purchase order process
From “we need this” to “the supplier has been paid.”
The real value of a purchase order comes from connecting it to the rest of the buying process.
Xero and Sage both strongly position purchase-order software around tracking orders through to delivery, bills and payment. A small business can apply the same discipline without needing an enterprise procurement department.
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Decide what the business needs to buy.
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Create the purchase order.
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Send the PO to the supplier.
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Supplier confirms and fulfils the order.
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Check the delivery against what was ordered.
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Match the supplier bill to the PO before payment.
Why use purchase orders?
Purchase orders become more useful as the business gets busier.
Control spending
See what the business has committed to buy before the money actually leaves.
Reduce misunderstandings
Give suppliers a written record of the products, services, quantities and prices expected.
Track commitments
Open orders can reveal costs that are coming even though the invoice has not arrived yet.
Check supplier bills
Compare the invoice with the original order before approving payment.
Create an audit trail
Keep a clearer history of who ordered what and why the business paid for it.
Protect cash flow
Understanding committed future spending makes financial planning more realistic.
Purchase order vs invoice
They sit on opposite sides of the purchase.
Purchase order
The buyer normally creates the PO before or as the order is placed. It describes what the business intends to buy and the agreed details of that purchase.
Supplier invoice
The supplier issues the invoice to request payment for goods or services supplied. The buyer can then compare it with the original PO before approving the bill.
Purchase order management
Know what you’ve ordered even when it hasn’t been invoiced yet.
This is where purchase orders become more valuable than a document template.
Xero highlights spending control and cash-flow visibility, while Sage pushes real-time spend tracking and order status. The principle matters just as much to a small business: committed spending is still spending even if the bill has not arrived.
Draft
The purchase is being prepared but has not yet been committed.
Sent
The PO has been issued to the supplier.
Accepted
The supplier has confirmed the order.
Delivered
The relevant goods or services have been received.
Billed
The supplier invoice has arrived and can be checked against the PO.
Paid
The purchase has completed its journey through the accounts.
Purchase order mistakes
Five ways purchasing can become unnecessarily messy.
Without a reliable reference, matching orders to bills becomes much harder.
Be specific enough that the supplier understands exactly what has been ordered.
An order can affect future cash flow before an invoice has even arrived.
Compare bills against what was ordered and delivered rather than approving them automatically.
Keep orders connected to suppliers so previous purchases are easy to understand later.
Polar Purchase Orders
Keep purchasing connected to suppliers, bills and the money picture.
Polar Purchase Orders helps a small business record what it intends to buy before the supplier invoice appears.
Create the PO, connect it to the supplier, keep track of the order and carry the purchase into Polar Accounts when the bill arrives.
Purchase order FAQs
Purchase orders for UK small businesses: common questions.
What is a purchase order?
A purchase order is a document a buyer sends to a supplier setting out goods or services the business wants to purchase, usually including quantities, prices and relevant delivery or payment terms.
What should a purchase order include?
A useful PO normally includes a unique purchase-order number, buyer and supplier details, descriptions of what is being ordered, quantities, prices, relevant VAT information, delivery details and payment terms.
Does a small business need to use purchase orders?
Not every small business needs a formal PO for every purchase. They can become useful when you want stronger spending control, clearer supplier records or a reliable way to match purchases against bills.
What is the difference between a purchase order and an invoice?
The buyer generally issues a purchase order to record what it intends to buy. The supplier later issues an invoice requesting payment for the goods or services supplied.
What is a PO number?
A PO number is a unique reference attached to a purchase order. It helps the buyer and supplier identify the order and match related paperwork.
Can I create a purchase order for services?
Yes. A purchase order can record agreed services as well as physical products, provided the scope, pricing and other relevant terms are clear.
Should VAT be shown on a purchase order?
Where VAT is relevant and known, showing the expected VAT treatment can help make the anticipated cost of the purchase clearer. The supplier’s VAT invoice remains the relevant tax document for the actual supply.
Can a purchase order be turned into a bill?
Yes. Accounting systems commonly allow information from an existing purchase order to be carried into the supplier bill once the invoice arrives.
Why match a supplier invoice to a purchase order?
Matching helps confirm that the supplier is charging for what the business actually ordered and received, at the expected price.
Do purchase orders help with cash flow?
They can. Open purchase orders show spending the business has committed to even when the corresponding supplier bills have not yet arrived, giving a more complete view of upcoming costs.
Know what the business has committed to spend.
Supplier. Purchase order. Delivery. Bill. Payment. Keep the whole journey connected.
Polar Purchase Orders keeps planned spending attached to the supplier and the wider accounts picture instead of leaving another important business process buried in emails and spreadsheets.