Which is of More Importance? Bill, Invoice, or Purchase Order?

Several essential documents are involved when making a business transaction. Each document helps both the seller and buyer by making the transaction easy, transparent, and straightforward.

A bill, an invoice, and a purchase order are three of the most commonly used documents when a good or service is purchased. Each document is created with a particular function in mind. Although one document may be more important than another, each document services a particular use that cannot be overlooked. Therefore, this article is going to look at each document and explore the role it plays in the buying and selling of goods and services.

Bill

A bill is a document that a seller issues to a buyer for goods or services that are purchased within a local store or shop. This document typically contains the total amount due for products or services. In most cases, a bill is given to a buyer when instant payment is required. For example, a person that eats a meal at a restaurant or buys a cup of coffee at a café receives a bill. In such a case, the business expects the client to make payment for goods or services enjoyed before exiting the building.

Invoice

An invoice, on the other hand, is a financial document. It describes the details of the transaction between a seller and a buyer. This document is prepared by the seller and sent to the buyer. It details all the costs that are associated with selling goods or providing services.

Typically, an invoice is sent to the seller when goods or services have already been delivered. It contains a breakdown of the cost of item or service, taxes, discounts, handling fees, and the amount due. For example, an electrical contractor that performs an electrical service within a household will likely send an invoice after the job has been completed.

Purchase Order

Unlike an invoice or a bill, a purchase order comes from the buyer. This document is created by the buyer and sent to the supplier for the supply of goods or services. Once the document is received by the seller, it allows them to check their inventory and prepare a quotation for the buyer.

Within a typical purchase order, a buyer specifies the type and quantity of services or goods they require. In addition, a standard purchase order helps both parties involved to initiate a business transaction.

Comparison Between a Bill, an Invoice, and a Purchase Order

Although each document is different, there are similarities and differences between features within each document type.

Number

A typical bill may not necessarily have a number. However, an invoice and a purchase order both have a number. This number is used to keep a record of each invoice or purchase order that is issued.

Remarks and Comments

A bill, an invoice, and a purchase order can all have a remark or comment. The type of comment or remark written on such documents depends on what the issuer wants to achieve.

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