How Does a Purchase Order Work?

A purchase order (PO) is a formal document issued by a buyer to a seller, outlining the details of products or services to be purchased, including quantities, prices, and delivery terms. Once the seller accepts the PO, it becomes a legally binding contract that obligates the seller to deliver the goods and the buyer to pay for them. Purchase orders streamline the procurement process, providing clarity and documentation for both parties involved in the transaction.