When it comes to the world of purchasing, there is a vast array of terms and processes that can be overwhelming to understand. One of the key elements in this world is the use of purchase orders (PO) and non purchase orders (non PO) invoices. Understanding the difference between these two types of invoices is essential to running a successful business. In this blog post, we will discuss the 4 key differences between PO and non PO invoices, how they differ from one another, and how they can impact your bottom line. Whether you are a finance manager, business owner, or simply want to get a better understanding of the purchasing process, this post will provide you with the information you need in order to make informed decisions.
| PO Invoices | Non-PO Invoices |
|---|---|
| – PO invoices have an attached purchase order | – Non-PO invoices do not have an attached purchase order |
| – Mainly used for direct procurement | – Commonly used for indirect procurement |
| – Faster approvals and processing | – Invoice approval is often slower |
Difference Between PO & Non PO Based Invoice | Interview Questions of P2P
Create a purchase order number
Having a purchase order number makes it easier to categorize transactions with the PO designation and distinguish them from other invoices. It also facilitates the tracking of products sent to customers by inventory managers or software to account for any changes in the company’s inventory count. A PO number can typically be generated automatically by inventory control or ordering software, but you can also manually enter your own PO number, beginning with a number like 001 or 0001.
Benefits of PO invoices
Using PO invoices has many advantages, including:
Type of transaction
Some companies reserve PO invoices for specific kinds of transactions. Non-PO invoices are typically for any typical business transaction. For instance, non-PO invoices are those sent by a soap supplier to the neighborhood car wash for drums of industrial car detergent. However, if the same supplier gets a request from the car wash for a unique soap blend for exotic cars, the company may produce a PO invoice to track that special product through the inventory management system more successfully.
A contemporary AP automation solution can be used to greatly automate the processing of non-PO invoices. Automation opportunities include:
Automating the approval process for both PO and non-PO invoices benefits businesses. The approval of invoices will proceed much more quickly and efficiently. Additionally, increased visibility of financial metrics and company spending, as well as improved control over the AP process, will be advantageous to the entire organization. Share.
Since the purchase, supplier, and amount were approved as part of the requisition procedure leading up to the purchase order, a PO invoice is actually a pre-approved invoice. As a result, a PO invoice can be processed for payment automatically provided that all of the details match those on the purchase order and the goods receipt and there is no need for manual review or approval. If a discrepancy is found during the matching process, the buyer will receive the invoice for review and decision-making.
An end-to-end, fully automated, touchless process can be supported by intelligent matching of PO invoices. The AP automation solution can perform automatic matching when the data on a PO invoice obtained through OCR capture matches the data on the purchase order and goods receipt, so no one from accounts payable (or anywhere else in the organization) needs to touch the invoice.
Detailed information about the goods or services provided in accordance with the terms of the purchase order should be included in the PO invoice. When the purchase order arrives at accounts payable, the PO invoice is compared to the purchase order to make sure all the details match. When receiving goods or services, most businesses will conduct a three-way invoice matching process to ensure that the PO invoice details match both the purchase order and the goods receipt recorded in the procurement or ERP system. PO invoices typically include invoices for purchases of direct material.
What is a PO Invoice?
A PO (Purchase Order) invoice is one that the vendor issues in response to a purchase order the customer has created. Accounts Payable typically checks the PO invoice submitted by the vendors against the purchase order to make sure all the details (quantity, price, and PO number) are accurate before processing an invoice.
To determine whether the PO invoice details match the purchase order and the receipt number of the goods registered by the procurement system, some businesses will use a three-way invoice matching process. For instance, invoices for direct purchases of goods or services are frequently included in PO invoices.
Learn about the most popular PO Invoice examples:
What is a Non-PO Invoice?
Non-PO invoices are those that the vendor submits that aren’t associated with a purchase order. When an invoice falls under a direct spend budget or limit, non-PO invoices may also be used to pay vendors.
For indirect purchases or spending below the tolerance limit, non-PO invoices are frequently used. For managing invoices, they may have two key stakeholders: a preparer and an approver. There is a possibility that an organization’s cost center or internal order was utilized here.
Here are a few prominent Non-PO Invoice examples:
FAQ
What is one major difference between a purchase order and an invoice?
A purchase order is issued by the buyer and must be fulfilled by the vendor, whereas an invoice is issued by the vendor following the fulfillment of a purchase order and must be paid for by the buyer.
What is PO and Non-PO invoice in simple words?
When a purchase order has an invoice attached to it, it is known as a PO invoice. When a purchase order lacks an invoice, it is referred to as a non-PO invoice. A non-PO invoice may be preapproved, but a PO invoice is typically not. Indirect procurement uses non-PO while direct procurement uses a PO invoice.
What are the 3 details required to post non-PO invoice?
It makes it simple for the supplier to link the payment to their invoice. The invoice number, date, and amount are included in the most recent payment information.
What is PO and Non-PO invoice in SAP?
Invoices that are not based on a purchase order are known as non-PO invoices. When suppliers send paper invoices, users of the SAP Ariba invoicing solution create electronic non-PO invoices. Suppliers can also create non-PO invoices in Ariba Network if your business rules permit them to.
