What is a purchase order?

A purchase order is a crucial business document that facilitates the procurement process. It serves as an official request from a buyer to a vendor or supplier, specifying the products or services desired. This document outlines the quantities, descriptions, and agreed prices, allowing for clear communication between both parties. By using a purchase order, the purchasing organization ensures that it receives what it needs while also providing the supplier with a formalized order to process.

This systematic approach helps in maintaining accurate records, managing inventory, and streamlining the payment process. A purchase order can also confirm the terms of the purchase and can serve as a reference point in any disputes that may arise regarding the order. The correct response accurately captures the essence of what a purchase order is and its role in business transactions.