Everything You Need to Know About Purchase Invoice

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ūüďĚKey Takeaways:

  • Meaning and importance of a purchase invoice
  • Key differences between a purchase invoice and a purchase order
  • Ways to create a professional purchase invoice

Purchase orders and invoices are two important components of a business. Even though both serve more or less the same purpose, i.e., help prevent conflict between customers and businesses, they are two completely different things. 

The basic difference between purchase order and purchase invoice is that the former is issued by the customer while the latter is issued by the business. 

Another key difference between the two elements is that while the customer issues the purchase order before the completion of the order, the business issues a purchase invoice after the task at hand is finished. 

Having a well-established purchase invoice system makes the purchasing process a hassle-free experience for the client as well as the business. Therefore, purchase invoices are elemental in the growth of a business. 

Creating professional invoices can also help you convert your target audience into real customers, satisfy your existing customers, and beat the competition. 

Therefore, generating expert-level invoices is the need of the hour. We will take you through the various ways in which you can devise proper invoices. 

Furthermore, if you want to gain clarity about the difference between purchase order and invoice, determine purchase requisitions, understand the relevance of these concepts, seek answers to some of the frequently asked questions about invoices, and more, continue reading: 

Purchase Order vs Invoice

Purchase order vs invoice is an oft-discussed topic. Sometimes, people use both terms interchangeably, which is not right. 


This segment will educate you about the similarities and differences between purchase orders and purchase invoices. 


  • Legal aspect: Just like a purchase invoice, a purchase order is a legally binding contract.¬†¬†
  • Details: Purchase orders contain the same details as invoices, including delivery date, account balances, accounts payable, order quantities, services purchased, delivery method, vendor information, and so on.¬†
  • Purpose: Both purchase orders and invoices serve the same purpose. They aim at optimizing spending and bringing transparency to the buying process.¬†


  • Issuer:¬† The most notable difference between purchase orders and invoices is while the buyer sends purchase orders, the seller generates the purchase invoices.¬†
  • Time: The purchase order is issued during order placement, while the purchase invoice is issued after order completion.¬†
  • Address: While purchase orders serve as a confirmation of the purchase, the invoice confirms the sale.¬†
  • Advantage: Purchase orders make inventory tracking easy, and invoice helps ease the burden of calculating taxes and spending during the tax season.¬†

Importance of Purchase Invoices 

Purchase invoices simplifies the payment process. It prevents businesses from incurring losses. Keeping a tab on the invoices protects your business against scammers. 

The following reasons will help you realize the importance of a purchase invoice:

1. Helps you establish your legal rights

A purchase invoice can double up as a legally binding document, making it mandatory for your customers to pay for the goods or services rendered. 

Helps you establish your legal rights

In case of late payments, such documents act as proof and help you get compensation for the delay in payments. 

Purchase invoices eradicate the need for a separate contract, saving you time, energy, and money. Therefore, a purchase invoice assists you in substantiating your claim against any fraudulent customer. 

While a purchase invoice helps protect the legal rights of businesses, a purchase order assists in safeguarding customers’ rights.

Once you issue the purchase order and the vendor accepts it, it becomes legally binding for them to deliver the order on the due delivery date. 

Thus, purchase orders and invoices are great financial documents for exercising and protecting your legal rights!    

2. Assists you in receiving timely payments 

Dealing with defaulters is the most tricky aspect of running a business. Issuing a purchase invoice is an effective way to request payment from a client.  

These invoices help you in the payment procurement process and assist you in receiving payment on the due date. 

By clearly mentioning the payment terms and conditions on the purchase invoice, you are setting explicit expectations from your clients. Therefore, these invoices help you obtain timely payments. 

3. Facilitates better inventory management

Purchase invoices are the building blocks of an effective purchase order system. They help you keep a tab on the goods and services dispatches and what remains. 

Facilitates better inventory management

Quite a lot of big and small businesses lack clear inventory visibility. Generating accurate purchase invoices is a great way of establishing a successful purchase order framework. 

4. Establishes a healthy buyer-seller relationship

A purchase invoice serves as the digital solution for payment-related problems. It helps keep the buyers and sellers on the same page. Thereby helping both the parties build a healthy relationship with one another. 

With the customers having no outstanding invoices, they can repeat business with the company, and even the organization can unflinchingly indulge in a business transaction with the client. 

Therefore, purchasing invoices can be vital in establishing fruitful buyer-seller relationships. Thus, helping the business in maximizing its profits.   

5. Eliminates tracking issues 

Every purchase invoice features a unique invoice number, which makes it easy for businesses to associate the right goods or services with the right customer.   

Purchase invoice assists you in staying organized by helping you track all your recorded payments. Therefore, a purchase invoice assists you in eradicating tracking issues.  

Things to Consider for Your Purchase Invoice

A purchase invoice should mandatorily have some elements. Keeping the following points in mind wi you create an impeccable purchase invoice: 

1. Essential information 

Send invoices that contain all the essential order details. A purchase invoice lacking details leaves plenty of scope for confusion and miscommunication. 

Therefore, a professional purchase invoice should include some pertinent information like

  • A clear title on the top indicating the type of invoice¬†
  • The purchase invoice number¬†
  • Date of issuing the invoice¬†
  • Address of the business¬†
  • The billing address and shipping address of the clients
  • Complete detail of the goods or services provided to the customers¬†
  • Mode of payment¬†
  • Amount without the taxes
  • Taxes
  • Total (amount with taxes included)

2. Multiple payment options, including electronic payments 

Providing clients with multiple payment options, is a great way to receive timely payments. When the seller accepts all modes of payments, the buyers cannot find excuses to postpone the payments. 

Activating digital payments is a must, especially if you want your business to serve remote clients. You can use an estimating and invoicing tool such as InvoiceOwl to facilitate electronic and other payment methods. 

3. The option of e-signature

The option of e-signature

You cannot use it as a legally binding document without making your customers sign the purchase invoice. Therefore, clients’ signatures on official documents are a must. 

If you do not implement the e-signature framework, you will lose out on your legal rights or remote clients. Thus, it would be best if you considered implementing the e-signature policy. 

Then again, you can get e-signatures of your clients using an invoicing and estimating tool. Hence, it is highly advised to use invoicing software to request e-signatures from your clients on all the necessary official documents, including the purchase invoice.   

How to Create Purchase Invoice?

Generating professional purchase invoices may be a difficult feat to achieve, especially when your business keeps you occupied with many other tasks. The following ways can assist you in creating expert purchase invoices with ease:

1. Use an accounting software

An estimating, invoicing, and accounting software like InvoiceOwl can help you create the best purchase, purchase order, sales invoice, and other regular invoices. 

Use an accounting software

Manual records can get impossible to keep a tab on. A software that lets you store client data while helping you generate professional estimates and invoices is what you require to establish a functional business. 

Manually creating records is a time-consuming process. Moreover, it involves heaps and heaps of paperwork. Manual accounting also has scope for a lot of errors. 

A business owner, especially a field service business person, does not have time to spend on such extensive manual tasks. By employing InvoiceOwl, you can generate expert-level invoices and estimates in a matter of seconds! 

Since it aims to automate your work experience majorly, it involves absolutely no paperwork. Apart from facilitating error-free official documents, it also helps you accomplish quite a few other tasks.

Unlike most accounting software, the additional services provided by InvoiceOwl are immense. Have a look at them:

  • InvoiceOwl facilitates digital payments.¬†
  • It helps create credit memos to keep the clients informed.¬†
  • The software enables e-signature so that you can effectively cater to remote clients.
  • It assists in tracking payments for goods or services.¬†
  • ¬†InvoiceOwl is not only useful for generating purchase invoices but also for creating effective purchase orders.
  • Keep a tab on your business‚Äôs financial growth by generating reports using InvoiceOwl.
  • It assists you in getting reviews from clients.

Do You Need A Cure For Manual Invoicing Process?

InvoiceOwl is a cure for the manual estimating and invoicing process, helping many contractors worldwide.

2. Utilize a template 

Templates assist you in saving time and decreasing costs. They also help you to look and stay consistent. They add a professional touch to your business endeavours.

Some other benefits of templates include ease of use, increased flexibility, reduced errors, and more. Then again, you can use InvoiceOwl to access some of the best invoicing and estimating templates. 

The free templates by InvoiceOwl offer the following advantages:

  • Flexibility: You can download and edit these free templates in an app of your choice. Microsoft Word, Microsoft Excel, and Adobe PDF are some of the most popular applications you can use to edit the InvoiceOwl templates.¬†
  • Industry inclusivity: HVAC, construction, plumbing, house cleaning, hotel, roofing, painting, photography, landscaping, rental, shipping, attorney, handyman, consultant, and freelancer are some of the many industries InvoiceOwl templates cover.¬†
  • Various template types: You can use InvoiceOwl templates to generate multiple invoices, including purchase orders, sales invoices, supplier invoices, and more. The InvoiceOwl templates can help you issue accurate posts as well.¬†¬†¬†
  • Multiple functions: You can choose from various options, personalize the templates as you like, easily fill in every pertinent detail, and conveniently save and send invoices to the concerned parties.¬†
  • Other benefits: The other advantages of InvoiceOwl templates include professional designs, pertinent elements, and automatic calculations.

3. Consult a blog 

Referring to blogs can assist you in optimizing your business. They help you understand the meaning of complex business-related terms and phenomena like purchase orders, purchase invoices, sales invoices, accounts receivable turnover ratio, etc. 

Blog posts also keep you updated with the latest industry news, including licensing, the scope of business, emerging trends, and so on. 

With many internet users referring to blogs, you cannot undermine the relevance of blogs in the modern-day world. Therefore, blogs can help you discover new knowledge. 

Hence, referring to blog articles is a great way of taking tips to set up a perfect accounting system for your business. 

When Should You Use Purchase Invoice?

You can use a purchase invoice in numerous situations. Here is a list of uses the purchase invoice serves:

  • Keeping track: You can use purchase invoices to record the sales of all your goods or services. As the business grows, bookkeeping becomes necessary, and a purchase invoice assists you in bookkeeping.¬†¬†
  • Maintaining tax records: You must provide your CA with invoice lists during the tax season. Therefore, purchase and sales invoices help you smoothly sail past the tax season.¬†
  • Gaining legal protection: An official document such as a purchase invoice helps you move the court in case of refusal of pending dues and more.¬†
  • Analyzing business growth: Purchase and sales invoices are fundamental in generating reports. You can keep a tab on the financial aspect of your business by issuing a purchase and sales invoice.

What If We Tell You That You Can Create Purchase Orders in a Tap?

Yes, InvoiceOwl is here to help you with creating purchase orders in real time.

Frequently Asked Questions
  1. Is a purchase invoice a type of receipt?

    No, a purchase invoice is not a type of receipt. A purchase invoice is much more detailed than a regular receipt. Unlike a receipt, a purchase invoice helps the business accomplish many tasks.

  2. Who is responsible for creating the purchase invoice?

    Sellers are responsible for creating the purchase invoice.

  3. What is the significance of a purchase invoice?

    Purchase invoices are significant for the success of a business. They help businesses keep a tab on the goods or services sold, create an effective payment plan, receive payments on the due date, access legal rights, and more.

  4. How can I invoice directly?

    You can invoice directly by using invoicing and estimating software.


There are quite a few types of invoices, each serving a different purpose. Even though all of them share the same goal of improving the buyer-seller relationship, it is easy for people to feel puzzled. 

A purchase invoice is similar to a regular invoice; the only differentiating factor is that purchase invoices contain even more information, like the payment terms and conditions and the discount provided (if any).

Sales invoice and purchase invoice are two terms that are often used interchangeably. However, a purchase order is a different concept. 

While the customer issues the purchase order before delivering goods or services, the business issues the purchase invoice after rendering the goods or services. 

Generating professional estimates and invoices helps a business convert potential customers into real customers, retain the existing clientele, keep a tab on the business transaction, and more. 

You can generate the best invoices by incorporating certain elements and keeping a few factors in mind. Hopefully, referring to our article will help you build an effective accounting system for your business.

Author Bio
Jeel Patel
Jeel Patel

Jeel Patel is the founder of InvoiceOwl, a top-rated estimating and invoicing software that simplifies the invoicing and estimating processes for contractor businesses. Jeel holds a degree in Business Administration and Management from the University of Toronto, which has provided him with a strong foundation in business principles and practices. With understanding of the challenges faced by contractors, he conducted extensive research and developed a tool to streamline the invoicing and estimating processes for contractors. Read More