What is a PO Number on an Invoice? Meaning and Best Practices

If you've ever created an invoice for a business client, you may have been asked to include a PO number. But what is a PO number on an invoice? What is the PO number used for? And why do some clients require it?

This guide will explain what is a PO number on an invoice, clarify what is the PO number's purpose, and show you how to properly handle PO numbers in your invoicing process.

What is a PO Number on an Invoice? Basic Definition

A PO number (Purchase Order number) is a unique identifier assigned by a client when they issue a purchase order to authorize a purchase or service. When you're asked to include a PO number on an invoice, you're being asked to reference the client's purchase order number that authorized the work or purchase.

Understanding what is a PO number on an invoice helps you comply with client requirements and streamline the payment process.

Key Characteristics of PO Numbers:

• Client-generated - Assigned by the client, not by you
• Unique identifier - Each purchase order has a unique number
• Authorization reference - Links invoice to authorized purchase
• Payment processing - Required for many businesses to process payment
• Accounting tracking - Helps clients track and reconcile purchases

What is the PO Number? Understanding Purchase Orders

To fully understand what is a PO number on an invoice, it helps to understand purchase orders themselves:

What is a Purchase Order?

A Purchase Order (PO) is a document issued by a buyer (your client) that:

• Authorizes a purchase from a seller (you)
• Specifies what will be purchased
• Sets terms and conditions
• Creates a record of the authorized transaction

The Purchase Order Process:

1. Client creates PO - Client issues purchase order with unique PO number
2. Client sends PO to you - You receive the purchase order
3. You provide service/product - You complete the work or deliver goods
4. You create invoice - You invoice for the work
5. You include PO number - You reference the PO number on your invoice
6. Client processes payment - Client matches invoice to PO for payment

What is a PO Number on an Invoice Used For?

Understanding what is the PO number used for reveals why it's important:

1. Payment Authorization

PO numbers link invoices to authorized purchases:

• Shows the invoice is for authorized work
• Proves the client approved the purchase
• Required for payment processing by many businesses
• Helps prevent unauthorized charges

2. Accounting and Tracking

PO numbers help clients track purchases:

• Links invoices to budget allocations
• Helps track spending by department or project
• Simplifies expense categorization
• Aids in budget reconciliation

3. Invoice Matching

Many businesses use a "three-way match" process:

• Purchase order (PO)
• Receiving report (goods/services received)
• Invoice (your bill)

The PO number helps match all three documents to ensure:

• What was ordered matches what was received
• What was received matches what was invoiced
• Payment is accurate and authorized

4. Approval Workflows

PO numbers enable approval processes:

• Invoices with PO numbers may need less approval
• Helps route invoices to correct approvers
• Speeds up payment processing
• Ensures proper authorization

Where Does the PO Number Come From?

To understand what is a PO number on an invoice, you need to know where it comes from:

PO Number Source:

• Client provides it - Your client creates and assigns the PO number
• Before work begins - Usually provided when work is authorized
• In purchase order document - Found on the official purchase order
• Unique to that order - Each purchase order has its own number

When You Receive a PO:

Clients typically send purchase orders via:

• Email (PDF or electronic document)
• Online portal or system
• Paper document (less common)
• Procurement system notification

What to Do When You Receive a PO:

1. Note the PO number - Save it for invoicing later
2. Review the details - Ensure PO matches agreed work
3. Store it securely - Keep PO for your records
4. Reference it when invoicing - Include PO number on your invoice

How to Include PO Numbers on Invoices

Now that you understand what is a PO number on an invoice, here's how to include it:

Where to Put PO Number on Invoice:

Common Locations:

1. Invoice Header (Recommended)

   • Near invoice number and date
   • Clearly labeled as "PO Number" or "Purchase Order Number"
   • Easy for clients to find

2. Client Information Section

   • Near client name and address
   • Part of client reference information

3. Payment Terms Section

   • With payment and billing details
   • Often grouped with other reference numbers

Format Examples:

Invoice Number: INV-2024-001
PO Number: PO-2024-12345
Date: January 15, 2024

or

Client: ABC Company
Purchase Order Number: PO-2024-12345
Invoice Date: January 15, 2024

Best Practices for Displaying PO Numbers:

• Clear labeling - Use "PO Number" or "Purchase Order Number"
• Exact match - Use the exact PO number provided by client
• Prominent placement - Put it where clients can easily find it
• Consistent formatting - Use the same format as the PO document

What to Do If You Don't Have a PO Number

Sometimes you may not have a PO number. Here's what to do:

Scenario 1: Client Forgot to Provide PO

Solution:

• Ask the client for the PO number before invoicing
• Check if there's a PO for this work
• Some clients can provide PO after work starts

Scenario 2: Work Started Without PO

Solution:

• Contact client to get PO number retroactively
• Explain that you need it for invoicing
• Some clients can create PO after the fact

Scenario 3: Client Doesn't Use POs

Solution:

• Not all clients require PO numbers
• If they don't use POs, you don't need to include one
• Simply omit the PO number field

Scenario 4: Multiple POs for One Invoice

Solution:

• List all PO numbers clearly
• Format: "PO Numbers: PO-001, PO-002, PO-003"
• Or create separate invoices for each PO

Scenario 5: PO Number on Invoice But Client Doesn't Require It

Solution:

• You can still include it if you have it
• Helps with organization and tracking
• Shows professionalism
• Doesn't hurt to include it

PO Number Format Examples

PO numbers can appear in various formats. Understanding what is the PO number format helps you recognize and use them correctly:

Common Formats:

• Simple numeric: 12345
• Year prefix: PO-2024-001, 2024-12345
• Department code: DEPT-PO-12345, IT-2024-001
• Project code: PROJ-ABC-12345, PRJ-2024-001
• Vendor code: VENDOR-PO-12345
• Sequential: PO-001, PO-002, PO-003

Format Tips:

• Use exactly as provided - Don't change the format
• Include all characters - Letters, numbers, dashes, etc.
• Case sensitivity - Match the exact capitalization
• No modifications - Use the PO number exactly as the client provided it

Why PO Numbers Matter for Payment

Understanding what is a PO number on an invoice reveals why they're critical for payment:

Faster Payment Processing:

• Invoices with PO numbers are processed faster
• Less approval needed when PO exists
• Automatically routed to correct department
• Matches existing authorization

Reduced Payment Delays:

• Missing PO numbers cause delays
• Clients must verify authorization
• May require additional approval
• Can hold up payment significantly

Fewer Disputes:

• PO numbers prove authorization
• Reduces questions about charges
• Clear link between order and invoice
• Minimizes payment disputes

Better Client Relationships:

• Shows you follow their processes
• Demonstrates professionalism
• Builds trust and reliability
• Makes you easier to work with

PO Numbers in Different Business Contexts

Understanding what is a PO number on an invoice varies by context:

Large Corporations:

• Almost always required - Standard practice
• Strict enforcement - Payment delayed without PO
• Complex systems - May use procurement software
• Multiple approvers - PO enables approval workflows

Small to Medium Businesses:

• Sometimes required - Depends on size and processes
• Less strict - May be flexible about PO numbers
• Simpler systems - May use basic PO systems
• Fewer approvers - Still helpful for tracking

Government Contracts:

• Always required - Mandatory for government work
• Strict compliance - Must match exactly
• Specific formats - Often have specific requirements
• Legal requirement - Part of contract compliance

Non-Profits:

• Often required - Budget tracking important
• Grant compliance - May need PO for grant tracking
• Donor accountability - Helps track spending
• Similar to corporations - Formal processes

Common Questions: What is a PO Number on an Invoice?

Do I need to include PO numbers on all invoices?

No, only include PO numbers when:

• Your client provided a purchase order
• Your client specifically requests it
• Working with businesses that require it
• You have the PO number available

What happens if I forget to include the PO number?

Consequences can include:

• Payment processing delays
• Invoice returned for correction
• Request to resubmit with PO number
• Slower approval process

Can I create my own PO number?

No, PO numbers are assigned by the client. You should only use PO numbers provided by your client. Creating your own PO number would not match their system and could cause confusion.

What if the client doesn't provide a PO number?

Options include:

• Ask the client if they have a PO
• Check if one is required
• Some clients don't use POs
• Proceed without PO if not required

Can one invoice have multiple PO numbers?

Yes, if work was authorized under multiple purchase orders, you can:

• List all PO numbers on one invoice
• Or create separate invoices for each PO
• Check with client which they prefer

What's the difference between PO number and invoice number?

• PO Number: Assigned by client, authorizes purchase
• Invoice Number: Assigned by you, requests payment
• Both are important but serve different purposes

Do small businesses need PO numbers?

It depends:

• Small businesses may not use formal POs
• Some still find them helpful for tracking
• Not always required
• Check with individual clients

Best Practices for Handling PO Numbers

Follow these best practices when working with PO numbers:

1. Always Ask About PO Requirements

When starting work with a new client:

• Ask if they use purchase orders
• Request PO number if they do
• Understand their PO process
• Clarify requirements upfront

2. Store PO Numbers Securely

Keep track of PO numbers:

• Save purchase orders when received
• Note PO numbers for each project
• Organize by client or project
• Easy to reference when invoicing

3. Include PO Numbers Accurately

When creating invoices:

• Use exact PO number provided
• Don't modify or abbreviate
• Match format exactly
• Double-check before sending

4. Follow Up When Missing

If PO number is missing:

• Don't guess or make one up
• Ask client for PO number
• Explain why you need it
• Provide options if PO unavailable

5. Make PO Numbers Visible

On your invoices:

• Place PO number prominently
• Use clear labeling
• Make it easy to find
• Consistent formatting

PO Number vs. Other Reference Numbers

Understanding what is a PO number on an invoice helps distinguish it from other numbers:

PO Number vs. Invoice Number:

• PO Number: Client's purchase order (authorization)
• Invoice Number: Your bill number (payment request)
• Both needed but serve different purposes

PO Number vs. Contract Number:

• PO Number: Specific purchase authorization
• Contract Number: Overall agreement reference
• May both appear on invoice if applicable

PO Number vs. Project Number:

• PO Number: Purchase authorization
• Project Number: Project tracking identifier
• May be related but serve different purposes

How Invoice Software Handles PO Numbers

Modern invoice software makes PO number handling easier:

Features to Look For:

• PO number field - Dedicated field for PO numbers
• Client PO tracking - Store PO numbers per client
• Auto-populate - Remember PO numbers for clients
• Validation - Ensure PO number is included when required
• Search - Find invoices by PO number

Using Our Invoice Builder:

Our free invoice builder includes:

• PO number field in invoice header
• Easy to add and edit
• Professional formatting
• Clear labeling
• Standard placement

Conclusion: Understanding What is a PO Number on an Invoice

Understanding what is a PO number on an invoice is essential for working with business clients. A PO number is a purchase order number assigned by your client that authorizes a purchase or service. Including it on your invoice links your bill to their authorized purchase, enabling faster payment processing and better tracking.

Knowing what is the PO number used for helps you understand why clients require it and how to handle it properly. PO numbers facilitate payment authorization, accounting tracking, invoice matching, and approval workflows that many businesses rely on.

Best practices include asking about PO requirements upfront, storing PO numbers securely, including them accurately on invoices, and making them easily visible. When in doubt, always ask your client about their PO requirements rather than guessing.

Ready to create professional invoices with PO number fields? Use our free invoice builder to create invoices that properly accommodate PO numbers and meet your clients' requirements.