Order Ops

Purchase Order (PO)

A purchase order (PO) is a buyer's official offer to purchase goods, listing items, quantities, prices, delivery dates, and ship-to location. It becomes a binding contract once the seller accepts it. In EDI it is the 850 transaction, the document that starts most B2B order flows.

What a purchase order includes

A PO carries a PO number, the buyer and ship-to addresses, line items with SKU or GTIN, quantity, unit price, requested ship and delivery dates, and payment terms. The PO number threads through the whole order-to-cash cycle: the acknowledgment, the advance ship notice, the invoice, and the three-way match all reference it.

Paper, email, and EDI purchase orders

Large retailers send purchase orders as EDI 850s straight into your system. Smaller buyers still send POs by email, PDF, or spreadsheet, which is where manual keying and errors creep in. Handling EDI and document orders in one pipeline keeps every PO structured and out of someone's inbox.

Related Terms

Sales Order

A sales order is the seller's internal record of a confirmed customer order, created from the buyer's purchase order. It drives picking, packing, shipping, and invoicing. When a retailer's EDI 850 purchase order lands, it becomes a sales order in the supplier's ERP, ideally with no manual re-keying.

Three-Way Match

A three-way match is an accounts-payable control that compares three documents before an invoice is paid: the purchase order, the receiving record, and the supplier invoice. The quantities, prices, and terms must agree across all three. If they match, payment is approved. If they do not, the invoice is held for review.

EDI (Electronic Data Interchange)

EDI (Electronic Data Interchange) is the computer-to-computer exchange of business documents like purchase orders and invoices in a standard electronic format. It replaces paper, fax, and email so two trading partners' systems can transact directly, without anyone re-keying the data.

Learn More

EDI 850 Purchase Order Guide EDI 860 PO Change Guide Multi-Format Order Processing EDI Document Types Reference

Frequently Asked Questions

In EDI, a purchase order is the 850 transaction set. The buyer's system sends it electronically and the supplier's system turns it into a sales order, ideally with no manual re-keying.

A purchase order is the buyer's order placed at the start of the transaction. An invoice, the EDI 810, is the seller's bill sent after the goods ship. The PO authorizes the purchase; the invoice requests payment.

Sources: ASC X12 standards body

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