What Is a PO Number?

PO numbers help identify purchase orders or invoices. As a business owner, you will likely handle many invoices either submitted to you for payment from vendors or created by you for your work. Once you design an invoice that works for your business, you can set up systems or utilize invoicing solutions like Lendio’s software to help you manage invoices and PO numbers.

This guide will define and explain what a PO number is and why it’s important.

Defining a PO Number

PO stands for purchase order, which makes a PO number a unique number or series of numbers that correlate to a purchase order. This number helps to identify the invoice, making it easy to reference for all parties involved.

What Is a PO Number Used For?

Both invoice issuers and payers will use PO numbers to sort through payments and organize orders. This number differentiates the amount paid for a specific service on a specific date. 

For example, if you bill a client $400 in January and $400 in February, the PO number will help you to tell the 2 invoices apart. Your client can’t claim that they paid the February invoice just by showing you a payment for $400—they need to reference that payment to the purchase order using the PO number. 

How Do You Create PO Numbers?

There are many ways to develop PO numbers for your business. For example, some companies work up through their purchase numbers regardless of the client. The first invoice they ever send is 001, the second is 002, and so on. 

Other business owners create client codes for their purchase orders. Client A might start with 100, so the fifth invoice to that client is 1005. There’s no right or wrong way to create PO numbers—as long as you are using them consistently and in a uniform manner.

Can PO Numbers Include Letters?

Some invoicing software will allow you to include letters in your PO numbers, which can help if you use customer codes for your clients. For example, if you bill Tom Jones and it’s his seventh invoice, then you could make the PO number something like TJ007. 

How you develop PO numbers is up to you, but you need a system where each invoice number is unique. To get started, check out the systems created by Lendio. We offer free services to small business owners to get their invoices on track. Let us help you to improve your accounting efforts.

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