Purchase orders, quotes, invoices: what’s the difference? What are these documents used for in business operations, and how can you ensure they comply with current regulations? You’ll find the answers to these questions here, as we examine all the aspects of the purchase order—an optional commercial document (yet strongly recommended for the sale of commodities) established between buyers and sellers. You can read our articles on quotes and required items on invoices to further your knowledge on the topic.

What’s in this article?

• What is a purchase order and what is it for?
  
• Is a purchase order mandatory?
  
• What happens when you issue a purchase order?
  
• What information should you include on a purchase order?
  
• Where can I find a purchase order template?
  

What is a purchase order and what is it for?

A purchase order is a commercial document issued by the buyer, detailing the items of their request to their provider. It proves the existence of the order, helps the provider issue their invoice (and fulfill the order itself), and reduces the risk of misunderstandings or disputes as it formally articulates all the details of the order in writing.

It’s worth noting that purchase orders are typically used for sales of commodities, while quotes are better suited to sales of services. Quotes are always issued by professionals who send them to their customers, while purchase orders are a way for buyers to place orders with their providers.

Is a purchase order mandatory?

Though a purchase order isn’t mandatory, it is strongly recommended (especially for business-to-business sales of raw materials). It streamlines and organizes the ordering process, benefiting both parties who wish to do business together.

A purchase order is a practical document that is not submitted to the tax office. That said, it takes on the legal form of a contract once it has been signed by the provider and the buyer (just like a quote).

What happens when you issue a purchase order?

First, the provider must approve the buyer’s purchase order. Then, the provider issues a compliant invoice. Note that both parties involved are responsible for checking that the details on the invoice reflect the information recorded on the purchase order.

Once the invoice reaches the customer, the purchase order constitutes a contract, binding both parties until the professional fulfills the order. When a purchase order has been signed and approved, it constitutes legal protection for the customer, since the professional agreed to provide the items detailed in the document (product identification, quantity, price, etc.). On the provider’s end, the purchase order expresses the customer’s intention to buy.

Note: it is possible to cancel a purchase order that has not yet been signed and paid for.

What information should you include on a purchase order?

For a purchase order to be valid, it must contain the following information:

• The wording “bon de commande” (French for purchase order)
  
• The professional’s contact details: name and trade name, SIREN or SIRET number, legal form, commercial register (RCS) number and city of registration, address, value-added tax (VAT) number, and liquidation status (if applicable)
  
• The customer’s contact details: name, corporate name, billing address, and delivery address (in the case of a professional customer, the purchase order must also include the customer’s SIREN or SIRET number, RCS number, and VAT number)
  
• The order date, the order number, and the breakdown and description of the goods ordered (including quantities, brand, etc.)
  
• The price per unit exclusive of tax for each item ordered, the VAT rate applicable to each item, and the total amount of VAT owed
  
• The total price excluding taxes and the total price inclusive of all taxes
  
• The delivery date, terms of sale and payment, payment and shipping terms (including fees), and procedures to exercise the right of withdrawal
  
• The wording “bon pour accord” (good for agreement) or “lu et approuvé” (read and approved), followed by signature fields for both the recipient and the issuer of the purchase order
  

Once signed, both parties are committed to a commercial relationship, and the document itself is binding.

Where can I find a purchase order template?

The International Chamber of Commerce (ICC) provides a purchase order template available for download from its website. You can also use purchase order management software that integrates with your accounting software, such as Sage or Cegid, and automates the generation of your purchase orders as a buyer.

If you’re a supplier, there are several ways you can streamline your operations. When you generate an invoice with an invoicing tool such as Stripe Invoicing, you can add up to four custom fields to the invoice template (meaning you can include the relevant purchase order number). To comply with the French tax office, your invoice must include the purchase order number. Contact one of Stripe’s experts to find out how its solutions can help you optimize your invoicing process and personalize your invoices.