In this article
You might like
No items found.
See the latest spending trends for 25k+ companies on Ramp

Benchmark your company's expenses with Ramp's data.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Spending made smarter
Easy-to-use cards, spend limits, approval flows, vendor payments —plus an average savings of 5%.1
|
4.8 Rating 4.8 rating
Error Message
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Get fresh finance insights, monthly
Time and money-saving tips,
straight to your inbox
|
4.8 Rating 4.8 rating
Thanks for signing up
Oops! Something went wrong while submitting the form.
Ready to partner with Ramp?
Time is money. Save both.
Ready to partner with Ramp?
Time is money. Save both.
Ready to partner with Ramp?
Time is money. Save both.
Table of contents

Purchase order (PO) numbers and invoice numbers are essential identifiers in business transactions, but they serve distinct purposes. Understanding the difference between these two types is crucial for accurate record-keeping, financial management, and maintaining smooth supplier relationships.

A purchase order is a document you send to a supplier, detailing the items or services to be provided, the agreed-upon price, and the delivery terms. It serves as a formal purchase request and commitment to buy.

An invoice, on the other hand, is a document the supplier sends to you, outlining the goods or services provided, the corresponding prices, and any applicable taxes or fees. It is the supplier's request for payment and serves as a record of the transaction.

Now that you understand how both these documents differ, let’s look at the role of PO numbers and invoice numbers.

The role of PO numbers and invoice numbers in procurement

Let’s examine each one in a little more detail.

Definition and purpose of a purchase order (PO) number

A PO number is a unique identifier assigned to a purchase order, which allows you to track and manage your procurement processes more efficiently. It acts as a reference point, helping both you and the supplier to keep track of the transaction details. This information is essential for inventory management, accounting, and reconciliation purposes.

A PO number’s purpose is to:

  • Provide an identifier for efficient organization and referencing for past or ongoing purchases. This simplifies tasks like managing inventory, tracking order status, or resolving discrepancies.
  • Ease communication between different departments within your business and with the vendor. Everyone involved can easily reference the specific purchase order for details.
  • Create a clear audit trail and ensure all purchases adhere to established procedures, which helps prevent unauthorized purchases or fraudulent activity.
  • Streamline the approval process and ensure proper authorization for the purchase by linking the PO number to the original purchase request.
  • Serve as a reference for accounting purposes, linking the purchase order with invoices and payments for accurate financial record-keeping.

Next, let’s look at invoice numbers.

Definition and purpose of an invoice number

An invoice number is a unique identifier assigned to each sales invoice. Invoice numbers provide a clear record of all the invoices received by you. They are often required for tax reporting and auditing purposes. Maintaining accurate and sequential invoice numbers is crucial for maintaining a comprehensive record of your business's sales and revenue streams.

An invoice number’s purpose is to:

  • Enable proper organization of financial records by providing a unique reference point for verifying purchases, processing payments, or resolving disputes.
  • Facilitate communication between the buyer and seller by being a single reference point for all purchase details, which reduces confusion and ensures everyone is on the same page.
  • Efficiently track payments made towards a specific purchase, which helps identify any outstanding balances or potential discrepancies.
  • Ensure accurate financial record-keeping by linking the invoice with the corresponding purchase order and payment records, providing a clear audit trail for accounting purposes.
  • Help claim input tax credits, maintain accurate tax records, and simplify compliance procedures.
  • Minimize errors in data entry and processing, promoting overall efficiency.
  • Improve cash flow management by helping track invoice due dates and outstanding balances linked to invoice numbers.
  • Provide insights into sold items and help maintain optimal stock levels.

Thus, both PO numbers and invoice numbers facilitate communication, tracking, and record-keeping between you and your suppliers. They help you ensure transparency, accountability, and efficient management of your procurement activities.

However, it is vital to understand the PO number vs invoice number difference.

PO number vs invoice number: Key differences

Here are the key differences between PO numbers and invoice numbers:

PO Number Invoice Number
Purpose It is generated by you (the buyer) to authorize a purchase of goods or services from a supplier. It is assigned by the seller to document the request for payment for the goods or services provided.
Timing It is created at the time of PO creation, when requesting for the goods or services to be delivered. It is created at the time of formally requesting payment, after the goods or services have been delivered.
Issuer You (the buyer) issue the PO number to the seller. The seller assigns the invoice number.
Reference Used as a reference for tracking and receiving goods or services, as well as matching invoices to purchase orders. Helps in tracking payments, reconciling accounts, and maintaining financial records.
Accounting Helps in budgeting, planning, and managing procurement processes. Helps in accounts payable processes, payment reconciliation, and financial reporting.

As you can see, despite their similarity there are key differences between PO numbers and invoice numbers with respect to their purpose, timing, issuer, reference, and accounting implications.

We hope this article has helped clarify the PO number vs invoice number differences. Understanding these distinctions is essential for efficient procurement, payment processing, and financial record-keeping.

If you’re looking for a solution to make tracking PO numbers and invoice numbers easier, check out Ramp’s procurement software. It automatically generates purchase orders from approved requests, links them to upcoming invoices, matches invoices to purchase orders for added control, and provides a consolidated view of all purchase activities. Try Ramp’s procurement solution today!

Try Ramp for free
Error Message
 
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Group Manager of Product Marketing, Ramp
Chris Sumida is the Group Manager of Product Marketing at Ramp, located in Ladera Ranch, California. With almost a decade in product marketing, Chris has a knack for leading successful teams and strategies. At Ramp, he’s been a driving force behind the launch of Ramp Procurement, which makes procurement easier and more efficient for businesses. Before joining Ramp, Chris worked at Xero and LeaseLabs®️, creating and implementing marketing plans. He kicked off his career at Chef’s Roll, Inc. Chris also mentors up-and-coming talent through the Aztec Mentor Program. He graduated from San Diego State University with a BA in Political Science.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

FAQs

Why Abode's CEO, Tyler Bliha, chose Ramp over Brex

"The reason I've been such a super fan of Ramp is the product velocity. Not only is it incredibly beneficial to the user, it’s also something that gives me confidence in your ability to continue to pull away from other products."
Tyler Bliha, CEO, Abode

“Just do it:” How Bratjen Construction Modernized Processes, Saved Time, and Improved Accuracy with Ramp

“Prior to Ramp, we had a handful of cards that our owners and leadership had access to, but it was more of a trust based system. Ramp has allowed us to give cards to more people, but the controls in Ramp ensure that the cards are used properly.”
Michael Irvin, Director of Operations, Bratjen Construction

How MAGNA-TILES® implemented a corporate card program, reduced stress, and prepared to build with Ramp

"In my day-to-day, Ramp helps me resolve things quickly and expedite month-end close. From an overall holistic business standpoint, we now have the ability to quickly scale as we add new users. It’s kind of crazy how quickly things have grown here, and Ramp has been a great partner for us in that growth.”
Tim Borse, Assistant Controller, MAGNA-TILES

How Eventbrite streamlined processes and improved UX with Ramp

"The Ramp dashboard easily shows how many cardholders are paying for the same subscription. Now the procurement team has the information they need to negotiate a corporate package.”
Laura Moreno, Sr. Manager, Global AP, Eventbrite

How Boys & Girls Clubs of America improved efficiency, gained visibility over spend, and regained lost time with Ramp

How Evans Hotels saved time and gained spend visibility with Ramp

“Ramp has been a big win for us when it comes to transparency and visibility. If the executive team wants to dig into spend at a property or review purchases the teams are making, we can have that information really quickly and are confident it’s accurate.”
Caryn Fink, Director of Accounting, Evans Hotels

How Ramp became KIPP Nashville’s biggest financial win

"There was no fire drill for the beginning of the school year this year, because the schools had a process. Ramp will ingest the line items automatically, so no more manual import. It’s made the process so much easier."
Carey Peek, CFO, KIPP Nashville Public Schools