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ELECTRONIC DATA INTERCHANGE (EDI)PURCHASE ORDERS & INVOICES

Illustration showing Purchase Order and Invoice cycle

As well as customers purchasing goods, companies need a way to buy and sell goods. The traditional approach is to use Purchase Orders and Invoices.

Purchase Order

A Purchase Order is made before a sale by the buyer. Once the seller has accepted the document it becomes a legally-binding contract. This contract is needed because with a Purchase Order, the delivery is usually made to the buyer before payment. A Purchase Order will usually include information such as:

  • Payment terms
  • Date of delivery
  • Terms & conditions
  • Purchase order number
  • Delivery address

Invoices

An Invoice is what is given to a buyer which highlights the cost and quantity of a product or service. This is provided by the seller after the sale as opposed to before it. This is useful to the buyer because they know exactly how much money must be paid and in what time frame. Invoices can either be sent through the post or emailed to the buyer. It is a legal contract obliging someone to pay for the goods or services they have received. An Invoice will usually include information such as:

  • Contact details of the buyer and seller
  • What the product/service is
  • A unique invoice number
  • The total cost that the buyer must pay – taking into account tax and/or discounts

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Drag and drop the elements below to the correct group:

PURCHASE ORDER

INVOICE