What is a purchase order?

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A purchase order (PO) is a formal document issued by a buyer to a supplier authorising the purchase of goods or services at a specified quantity, price, and delivery date. It is a legally binding commercial document that creates a contractual commitment between buyer and supplier.

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In the procure-to-pay process, the purchase order is the starting point. Everything that follows — the supplier delivering goods, the goods receipt being recorded, the invoice being matched and paid — is anchored to the original PO.

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Why POs matter for financial control

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Purchase orders are the primary internal control against unauthorised spending. A company with a robust PO process knows, before any money changes hands, what it has committed to spend, with which suppliers, and under which budget. Without POs, spend is only visible after the invoice arrives — too late to prevent it.

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POs also enable three-way matching: the AP team can confirm that the invoice matches what was ordered (the PO) and what was actually received (the goods receipt note), before approving payment. This catches pricing errors, quantity discrepancies, and duplicate invoices automatically.

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Maverick buying and why it's a problem

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Maverick buying — purchasing without raising a PO — is a pervasive issue in many organisations. It happens when the PO process is seen as slow or bureaucratic, when business units work around procurement to meet urgent needs, or when the system makes raising a PO harder than it should be. The result is invoices arriving for which there is no PO to match against, creating manual work and control gaps in AP.

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Related: Procure-to-Pay (P2P) · Three-Way Matching · Invoice Matching · AP Automation