{"id":14534,"date":"2026-07-01T09:01:23","date_gmt":"2026-07-01T13:01:23","guid":{"rendered":"https:\/\/www.sage.com\/en-ca\/blog\/?p=14534"},"modified":"2026-07-01T09:03:13","modified_gmt":"2026-07-01T13:03:13","slug":"what-is-a-purchase-order","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-ca\/blog\/what-is-a-purchase-order\/","title":{"rendered":"What is a purchase order (PO) and how is it used?"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--standard entry-header--has-illustration entry-header--has-illustration--standard\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat is a purchase order (PO) and how is it used?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\tIf your business buys from suppliers, purchase orders are one of the most important controls you have. Learn what a purchase order includes, how it works, and when to use each type.\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \">Published <time class=\"entry-date published\" datetime=\"2026-07-01T09:01:23-04:00\">July 1, 2026<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What is a purchase order (PO) and how is it used?\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-ca\/blog\/what-is-a-purchase-order\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-ca\/blog\/author\/lauraslingo\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/laura-slingo-headshot-350x350.jpg\" class=\"entry-author__image\" alt=\"Laura Slingo\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/laura-slingo-headshot-350x350.jpg 350w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2026\/03\/laura-slingo-headshot.jpg 400w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Laura Slingo<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>When you\u2019re dealing with one supplier and one order, a quick email works fine.<\/p>\n\n\n\n<p>But when you have 10 suppliers, 50 orders, and multiple locations, things can start to unravel without a structured purchase order process.<\/p>\n\n\n\n<p>Without purchase orders, procurement can become inconsistent, leading to mismatched invoices, unclear agreements, and limited visibility when issues arise.<\/p>\n\n\n\n<p>But what is a purchase order, exactly?<\/p>\n\n\n\n<p>Once you understand the main types of purchase orders and how they\u2019re used, you\u2019ll see how they differ from invoices and why they\u2019re essential to so many businesses.<\/p>\n\n\n<section id=\"key-takeaways\" class=\"wp-block-sage-key-takeaways\"><div class=\"sage-key-takeaways__inner\"><h2 class=\"wp-block-heading has-h-3-font-size\">Key Takeaways<\/h2>\n<ul class=\"wp-block-list\">\n<li>A purchase order (PO) is a document a buyer sends to a supplier to formally request goods or services, specifying what\u2019s being ordered, at what price, in what quantity, and on what terms.<\/li>\n\n\n\n<li>Once a supplier accepts a PO, the purchase order can become a binding agreement that helps protect both parties if delivery is delayed, items are incorrect, or pricing changes mid-order.<\/li>\n\n\n\n<li>POs sit at the centre of the procure-to-pay process, helping enable a three-way match between the purchase order, delivery receipt, and invoice.<\/li>\n\n\n\n<li>A standard PO includes a unique PO number, buyer and supplier details, item descriptions and quantities, payment terms, and delivery information.<\/li>\n\n\n\n<li>There are four main types of purchase orders: standard, planned, blanket, and contract. Each type suits different buying frequencies, supplier relationships, and levels of order certainty.<\/li>\n\n\n\n<li>Purchase orders differ from invoices in a key way: the buyer issues the PO before a transaction to request goods or services, while the seller issues the invoice after delivery to request payment.<\/li>\n<\/ul>\n<\/div><\/section>\n\n\n<p><strong>Here&#8217;s what we&#8217;ll cover:<\/strong><\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-what-is-a-purchase-order\" data-level=\"2\">What is a purchase order?<\/a><\/li><li><a href=\"#h-what-is-the-purpose-of-a-purchase-order\" data-level=\"2\">What is the purpose of a purchase order?<\/a><\/li><li><a href=\"#h-what-does-a-purchase-order-include\" data-level=\"2\">What does a purchase order include?<\/a><\/li><li><a href=\"#h-what-are-the-differences-between-a-purchase-order-and-an-invoice\" data-level=\"2\">What are the differences between a purchase order and an invoice?<\/a><\/li><li><a href=\"#h-purchase-order-example\" data-level=\"2\">Purchase order example<\/a><\/li><li><a href=\"#h-what-are-the-different-types-of-purchase-orders\" data-level=\"2\">What are the different types of purchase orders?<\/a><\/li><li><a href=\"#h-manage-purchase-orders-effectively-with-po-software\" data-level=\"2\">Manage purchase orders effectively with PO software<\/a><\/li><li><a href=\"#h-frequently-asked-questions-about-purchase-orders\" data-level=\"2\">Frequently asked questions about purchase orders<\/a><\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-a-purchase-order\">What is a purchase order?<\/h2>\n\n\n\n<p>A purchase order can be defined as a document a buyer sends to a supplier to formally request goods or services.<\/p>\n\n\n\n<p>A purchase order typically specifies:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>What\u2019s being ordered.<\/li>\n\n\n\n<li>At what price.<\/li>\n\n\n\n<li>In what quantity.<\/li>\n\n\n\n<li>On what terms.<\/li>\n<\/ul>\n\n\n\n<p>The \u201cbinding agreement\u201d element is an important part of the purchase order definition. Once the supplier accepts the PO, the purchase order can become a contract between the buyer and supplier.<\/p>\n\n\n\n<p>That\u2019s a detail many people overlook.<\/p>\n\n\n\n<p>A PO isn\u2019t just an internal record or a polite request. It\u2019s a formal agreement that helps protect both parties if something goes wrong.<\/p>\n\n\n\n<p>If delivery is delayed, the wrong items arrive, or pricing changes mid-order, the PO is the document you refer to.<\/p>\n\n\n\n<p>A purchase order also differs from a sales order, though the two documents are closely related. The buyer creates the PO to initiate and document the purchase; the supplier responds with a sales order to confirm they can fulfil it.<\/p>\n\n\n\n<p>The same transaction has two documents from two different perspectives.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-purpose-of-a-purchase-order\">What is the purpose of a purchase order?<\/h2>\n\n\n\n<p>Purchase orders formalise and document purchases from external suppliers, from one-off orders to ongoing, multi-location procurement.<\/p>\n\n\n\n<p>In practice, purchase orders play a central role across the procurement workflow, from initial request through to payment and reconciliation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-the-procure-to-pay-process\">The procure-to-pay process<\/h3>\n\n\n\n<p>Purchase orders sit at the centre of the <a href=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-procure-to-pay\/\">procure-to-pay process<\/a>, which follows a clear sequence from request to payment:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>A need is identified.<\/li>\n\n\n\n<li>A purchase order is created and approved internally.<\/li>\n\n\n\n<li>The PO is sent to the supplier.<\/li>\n\n\n\n<li>The supplier fulfils the order.<\/li>\n\n\n\n<li>Goods are received and checked against the PO.<\/li>\n\n\n\n<li>The invoice is matched against the PO and delivery receipt.<\/li>\n\n\n\n<li>Payment is released once everything aligns.<\/li>\n<\/ol>\n\n\n\n<p>The three-way match process compares the purchase order, delivery receipt, and invoice. This helps businesses confirm they\u2019re paying for what was ordered, received, and billed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-beyond-individual-transactions\">Beyond individual transactions<\/h3>\n\n\n\n<p>Beyond single purchases, POs also function as a <a href=\"https:\/\/www.sage.com\/en-ca\/blog\/a-guide-to-budgeting-and-goal-setting-for-small-businesses\/\">budgeting and audit<\/a> tool.<\/p>\n\n\n\n<p>Because every order is pre-approved and logged, finance teams can track committed spend instead of discovering overspend after the fact.<\/p>\n\n\n\n<p>At audit time, the full documentation trail is already in place.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-does-a-purchase-order-include\">What does a purchase order include?<\/h2>\n\n\n\n<p>A purchase order typically includes five core elements that define and control the transaction between buyer and supplier: a purchase order number, buyer and supplier information, order details, <a href=\"https:\/\/www.sage.com\/en-ca\/blog\/invoice-payment-terms\/\">payment terms<\/a>, and delivery details.<\/p>\n\n\n\n<p>A standard PO usually includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Purchase order number (PON):<\/strong> a unique reference to track the order.<\/li>\n\n\n\n<li><strong>Buyer and supplier details:<\/strong> company names, addresses, and contact information.<\/li>\n\n\n\n<li><strong>Order details:<\/strong> item descriptions, quantities, unit prices, and totals.<\/li>\n\n\n\n<li><strong>Payment terms:<\/strong> how and when payment will be made, such as Net 30.<\/li>\n\n\n\n<li><strong>Delivery details:<\/strong> shipping address, delivery date, and method.<\/li>\n<\/ul>\n\n\n\n<p>Together, these fields make the transaction clear, traceable, and easier to manage for both parties.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-differences-between-a-purchase-order-and-an-invoice\">What are the differences between a purchase order and an invoice?<\/h2>\n\n\n\n<p>While purchase orders are sent before a transaction to request goods or services, invoices are sent to request payment after delivery. The PO sets the terms and the invoice collects on them. <\/p>\n\n\n\n<p>Understanding the difference also helps when <a href=\"https:\/\/www.sage.com\/en-ca\/blog\/invoice-cheat-sheet\/\">writing an invoice<\/a>, because the invoice should reflect the agreed details from the purchase order, including item descriptions, quantities, prices, and payment terms.<\/p>\n\n\n\n<p><strong>Here\u2019s a breakdown of the key differences:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><\/th><th>Purchase order<\/th><th>Invoice<\/th><\/tr><\/thead><tbody><tr><td><strong>Issued by<\/strong><\/td><td>Buyer<\/td><td>Seller<\/td><\/tr><tr><td><strong>Timing<\/strong><\/td><td>Before the transaction<\/td><td>After delivery<\/td><\/tr><tr><td><strong>Purpose<\/strong><\/td><td>Formally requests goods or services<\/td><td>Requests payment<\/td><\/tr><tr><td><strong>Is it legally binding?<\/strong><\/td><td>Yes, once the supplier accepts it<\/td><td>Yes; outlines the final amount due<\/td><\/tr><tr><td><strong>Contains<\/strong><\/td><td>Item details, quantities, prices, delivery terms<\/td><td>Amount due, payment due date, bank details<\/td><\/tr><tr><td><strong>Initiated by<\/strong><\/td><td>An internal purchase request or approval<\/td><td>Fulfillment of the purchase order<\/td><\/tr><tr><td><strong>Used for<\/strong><\/td><td>Budget control and procurement tracking<\/td><td>Accounts payable and payment processing<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Many people confuse purchase orders and invoices, but they serve completely different purposes in the buying process.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-purchase-order-example\">Purchase order example<\/h2>\n\n\n\n<p>So, what does a purchase order look like in a real-life business setting? Let\u2019s look at a concrete example.<\/p>\n\n\n\n<p>Imagine you run a clothing company preparing for your next seasonal collection, and you need to order fabric from a trusted supplier.<\/p>\n\n\n\n<p>Rather than relying on informal or verbal agreements, you issue a purchase order that clearly defines exactly what you\u2019re buying, from whom, and under what terms.<\/p>\n\n\n\n<p>Here\u2019s what a standard PO for the fabric would include:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Basic details for tracking<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Purchase order number:<\/strong> a unique identifier for this specific order.<\/li>\n\n\n\n<li><strong>Purchase order date:<\/strong> the date the order was created.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">2. Buyer and supplier information<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Supplier name and billing address:<\/strong> the supplier\u2019s business details.<\/li>\n\n\n\n<li><strong>Buyer name and shipping address:<\/strong> your company\u2019s details, including where the order should be delivered.<\/li>\n\n\n\n<li><strong>Additional contact information:<\/strong> phone numbers and email addresses for both parties.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">3. Shipping and delivery terms<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Delivery date:<\/strong> the expected or agreed-upon date for the goods to arrive.<\/li>\n\n\n\n<li><strong>Shipping method:<\/strong> the chosen transportation method, such as standard freight or express delivery.<\/li>\n\n\n\n<li><strong>Shipping terms:<\/strong> who is responsible for shipping costs and potential damage.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">4. Order details<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Item name:<\/strong> the product being ordered, such as \u201ccotton fabric\u2014light blue.\u201d<\/li>\n\n\n\n<li><strong>Item description and technical information:<\/strong> specifications such as material composition, weight, and texture.<\/li>\n\n\n\n<li><strong>Item quantity:<\/strong> the number of units ordered, such as 50 metres.<\/li>\n\n\n\n<li><strong>Item unit cost:<\/strong> the price per unit measurement, such as $10 per metre.<\/li>\n\n\n\n<li><strong>Line total:<\/strong> the cost for each item category, such as 50 metres x $10 = $500.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">5. Cost breakdown and payment terms<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Taxes:<\/strong> any applicable sales taxes, such as GST\/HST, PST, or QST where relevant.<\/li>\n\n\n\n<li><strong>Total price:<\/strong> the final cost after taxes and discounts.<\/li>\n\n\n\n<li><strong>Payment terms:<\/strong> how and when payment is expected, such as \u201cNet 30\u2014payment due within 30 days.\u201d<\/li>\n<\/ul>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Free Invoice Templates<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Download the Free Invoice Template Bundle from Sage Canada and say goodbye to late payments in your organization.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-02691205-7c3c-4385-b8fc-5d8298355b2c\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download Free Invoice Templates<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2020\/05\/Challenge_01-1440x810.png\" class=\"single-cta__image\" alt=\"prepping tax and accountat forms in an office in Victoria Vancuver Canada\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2020\/05\/Challenge_01-1440x810.png 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-different-types-of-purchase-orders\">What are the different types of purchase orders?<\/h2>\n\n\n\n<p>There are four main types of purchase orders: standard purchase orders (SPOs), planned purchase orders (PPOs), blanket purchase orders (BPOs), and contract purchase orders (CPOs). The right type depends on how often you buy, how well you know your quantities, and the nature of your supplier relationship.<\/p>\n\n\n\n<p>Here\u2019s a breakdown of when to use each.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Standard purchase order (SPO)<\/h3>\n\n\n\n<p>A standard purchase order is the most common type of order. It\u2019s used for one-time purchases with clearly defined details.<\/p>\n\n\n\n<p>A standard purchase order includes exact specifications, such as quantity, price, and delivery date.<\/p>\n\n\n\n<p>For example, you need to upgrade the chairs in your office, so you order 50 office chairs from a furniture supplier that need to be delivered in five days.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Planned purchase order (PPO)<\/h3>\n\n\n\n<p>A planned purchase order is similar to a standard PO but uses estimated order quantities and dates.<\/p>\n\n\n\n<p>A planned purchase order helps your business plan future purchases ahead of time. It can be useful when you know you need specific products or services but don\u2019t know the exact delivery schedule yet.<\/p>\n\n\n\n<p>For example, if you manage a restaurant and need to estimate monthly supply orders for fresh produce, you might use a PPO.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Blanket purchase order (BPO)<\/h3>\n\n\n\n<p>A blanket purchase order, also known as a standing order, is useful for recurring purchases over a set period.<\/p>\n\n\n\n<p>A blanket purchase order locks in pricing and terms upfront, but you can decide on specific quantities and delivery dates later.<\/p>\n\n\n\n<p>If your business has ongoing supplier relationships, a BPO can streamline your purchase order process and help ensure you have the supplies you need.<\/p>\n\n\n\n<p>For example, imagine that you run a printing company that orders bulk paper supplies throughout the year as needed. Instead of placing multiple individual orders, a BPO simplifies the process and keeps costs more predictable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Contract purchase order (CPO)<\/h3>\n\n\n\n<p>A contract purchase order is the most flexible type of PO.<\/p>\n\n\n\n<p>A CPO establishes a long-term agreement with a supplier but doesn\u2019t specify exact order quantities upfront.<\/p>\n\n\n\n<p>You\u2019ll typically use a CPO when you expect to make multiple purchases from the same supplier over time but don\u2019t have fixed details yet.<\/p>\n\n\n\n<p>Say you handle accounting for a construction company that partners with a supplier for various building projects. Since material needs change from project to project, a CPO keeps the relationship in place without committing to specific quantities right away.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-manage-purchase-orders-effectively-with-po-software\">Manage purchase orders effectively with PO software<\/h2>\n\n\n\n<p>As your business grows, managing purchase orders manually becomes harder to control.<\/p>\n\n\n\n<p>Missed orders, mismatched invoices, and limited visibility into what\u2019s been committed or spent can quickly reduce the control a good PO process is supposed to provide.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.sage.com\/en-ca\/accounting-software\/purchase-orders\/\">Purchase order software<\/a> automates the process from creation through to payment, giving finance teams the controls and visibility they need without the administrative overhead.<\/p>\n\n\n\n<p>Explore how Sage purchase order software and <a href=\"https:\/\/www.sage.com\/en-ca\/accounting-software\/invoicing\/\">invoicing software<\/a> can help your business stay organised and in control.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions-about-purchase-orders\">Frequently asked questions about purchase orders<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1781273531845\"><strong class=\"schema-faq-question\">What is the difference between a purchase order and a purchase requisition?<\/strong> <p class=\"schema-faq-answer\">A purchase requisition is an internal request for approval to make a purchase, so it stays within the business. A purchase order is the formal document issued to the supplier once that request is approved. The requisition starts the process; the PO authorises it.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781273557145\"><strong class=\"schema-faq-question\">Can a purchase order be cancelled?<\/strong> <p class=\"schema-faq-answer\">A PO can usually be cancelled before the supplier accepts it without legal consequence. Once accepted, a PO can become a binding agreement, and cancellation may result in penalties or liability depending on the agreed terms.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781273577176\"><strong class=\"schema-faq-question\">Do small businesses need purchase orders?<\/strong> <p class=\"schema-faq-answer\">Not always. For very small or infrequent purchases, a PO may add unnecessary admin. But as supplier relationships and order volumes grow, POs become an important tool for controlling spend, avoiding disputes, and maintaining accurate financial records.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781273622745\"><strong class=\"schema-faq-question\">Who issues a purchase order?<\/strong> <p class=\"schema-faq-answer\">A purchase order is issued by the buyer. It\u2019s typically created by a procurement or purchasing team after an internal request is approved, then sent to the supplier to formally request goods or services.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781273636068\"><strong class=\"schema-faq-question\">What happens after a purchase order is issued?<\/strong> <p class=\"schema-faq-answer\">After a purchase order is issued, it\u2019s sent to the supplier for review. If the supplier accepts it, the PO can become a binding agreement. From there, the supplier fulfils the order, the buyer receives and checks the goods or services against the PO, and the supplier sends an invoice. The invoice is then matched to the PO and receipt before payment is approved and processed.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1782910202197\"><strong class=\"schema-faq-question\">Does a purchase order need to include GST\/HST?<\/strong> <p class=\"schema-faq-answer\">A purchase order should include enough detail for the buyer and supplier to understand the cost of the order, including any applicable taxes where relevant. In Canada, that may include GST\/HST, PST, or QST depending on the province or territory and the nature of the transaction. Businesses should check the relevant tax guidance or speak with an accountant if they\u2019re unsure what tax details to include.<\/p> <\/div> <\/div>\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p class=\"cta-content__title\">Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-8949a954-88b2-43bb-8b8a-77c53eb34350\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n<section class=\"more-topics alignfull has-grey-light-background-color wp-block-sage-post-topics\">\n\t<div class=\"container\">\n\t\t<div class=\"row\">\n\t\t\t<div class=\"col col-12 col-lg-4\">\n\t\t\t\t<h3 class=\"more-topics__title h2\">Browse more topics from this article<\/h3>\n\t\t\t<\/div>\n\t\t\t<div class=\"col col-12 col-lg-8\">\n\t\t\t\t<ul class=\"post-tags__list\">\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/tag\/accounting-101\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tAccounting 101\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/tag\/bookkeeping\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tbookkeeping\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/tag\/cash-flow\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tcash flow\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/tag\/small-business\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tsmall business\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t<\/ul>\n\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/section>\n\n\n<div class=\"alignfull wp-block-sage-related-posts\">\n\t<section class=\"related-posts card-grid has-dark-background-color\">\n\t<div class=\"container\">\n\t\t\t\t\t<div class=\"row\">\n\t\t\t\t<div class=\"col\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--featured h1\">Explore more wisdom<\/h2>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t\t\t<div class=\"row related-posts__featured\">\n\t\t\t\t<div class=\"col card-grid__item\">\n\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-0 post-14512 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters category-technology-innovation tag-bookkeeping tag-business-finances tag-cash-flow tag-digital-transformation tag-payment-processing tag-small-business business_type-small-business card-post--is-clickable\"\n>\n\t<div class=\"card-post__media-wrapper\">\n\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1307905756-1440x810.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1307905756-684x384.jpg 684w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1307905756-768x432.jpg 768w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1307905756-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\t<\/div>\n\n\t<div class=\"card-post__content\">\n\t\t\t\t\t<div class=\"card-post__label\">Recommended<\/div>\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-08T12:20:34-04:00\">June 8, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">14 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h3\">\n\t\t\t\t\t\t\t<a\n\t\t\t\t\tclass=\"card-post__title-link\"\n\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-ca\/blog\/invoice-automation-boosting-efficiency\/\"\n\t\t\t\t>\n\t\t\t\n\t\t\tInvoice automation: How to boost efficiency and get paid faster\u00a0\n\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/p>\n\n\t\t\n\t\t\t\t\t<p class=\"card-post__description\">\n\t\t\t\tSpending too much time chasing invoices and not enough time running your business? Invoice automation reduces errors and the time spent on manual invoicing tasks so you can get paid faster. Learn how invoice automation works, why it matters for your cash flow, and how to set it up. \t\t\t<\/p>\n\t\t\n\t\t\t<\/div>\n\n\t<\/article>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\n\t\t\t\t\t<div class=\"row related-posts__non-featured\">\n\t\t\t\t<div class=\"col col-12\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--more h4\">More on this Topic<\/h2>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-1 post-14436 post type-post status-publish format-standard has-post-thumbnail hentry category-strategy-legal-operations tag-accounting-101 tag-cloud-technology business_type-small-business business_type-medium-business business_type-accountants industry-professional-services\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-ca\/blog\/transform-professional-services-profitability\/\"\n\t\t\t\t\t>\n\t\t\t<figure 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\/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-02-04T13:22:49-05:00\">February 4, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">11 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tThe Ultimate Guide to Year-End Payroll in Canada (2026)\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-3 post-13703 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters category-technology-innovation tag-accounting-101 tag-ai tag-bookkeeping tag-business-intelligence tag-business-management tag-cloud-financial-management tag-cloud-technology tag-digital-transformation tag-entrepreneurship tag-how-to-grow-your-business tag-small-business tag-tax tag-workplace-technology business_type-small-business business_type-accountants\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-ca\/blog\/accounting-automation-tools-guide-for-accountants-and-bookkeepers\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2024\/10\/BrandShoot-LND_June2024_Financial-Services_0678-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2024\/10\/BrandShoot-LND_June2024_Financial-Services_0678-684x384.jpg 684w, 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srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-808410210-684x384.jpg 684w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-808410210-768x432.jpg 768w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-808410210-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2025-05-02T09:25:46-04:00\">May 2, 2025<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">11 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tCommon cash flow problems and how to solve them\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>If your business buys from suppliers, purchase orders are one of the most important controls you have. Learn what a purchase order includes, how it works, and when to use each type.<\/p>\n","protected":false},"author":1774,"featured_media":13498,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"sage_hide_published_date":false,"sage_hide_read_time":false,"sage_hide_share_buttons":false,"footnotes":""},"categories":[13,14,7],"tags":[162,165,271,267],"business_type":[3,99],"lilypad":[],"context":[],"industry":[],"persona":[],"imagine_tag":[35,255],"coauthors":[528],"class_list":["post-14534","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-process","category-compliance","category-money-matters","tag-accounting-101","tag-bookkeeping","tag-cash-flow","tag-small-business","business_type-small-business","business_type-medium-business"],"sage_meta":{"region":"en-ca","author_name":"Yassir Malik","featured_image":"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2025\/10\/fund-accounting-for-nonprofits.jpg","imagine_tags":{"35":"accounting software","255":"SBC Accounting"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Canada English","distributor_original_site_url":"https:\/\/www.sage.com\/en-ca\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts\/14534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/users\/1774"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/comments?post=14534"}],"version-history":[{"count":5,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts\/14534\/revisions"}],"predecessor-version":[{"id":14548,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts\/14534\/revisions\/14548"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media\/13498"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media?parent=14534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/categories?post=14534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/tags?post=14534"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/business_type?post=14534"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/lilypad?post=14534"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/context?post=14534"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/industry?post=14534"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/persona?post=14534"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/imagine_tag?post=14534"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/coauthors?post=14534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}