What does a 'purchase order' signify?

A 'purchase order' is fundamentally a document issued by a buyer to a seller, which contains important details about the products or services being purchased. This document typically outlines the type and quantity of items, as well as the agreed-upon price and delivery terms. It serves as a formal request to the seller to fulfill the specified purchase.

The significance of a purchase order lies in its role as a clear communication tool that establishes the buyer's intent to buy and the seller’s obligation to supply the described goods or services upon acceptance. This clarity helps to minimize confusion and ensures both parties are on the same page regarding the transaction.

While contracts, receipts, and invoices are all important documents in the purchasing process, they serve different functions. A contract may outline broader terms and conditions of sale, while a receipt confirms the goods received. An invoice details the amount owed after delivery. These documents can involve additional agreements or confirmations, but the purchase order specifically initiates the purchasing process by formally documenting the buyer's request.