Purchase Bill vs Purchase Order: Which Do You Need?
A purchase order asks the supplier for goods; a purchase bill records what arrived and what you owe. The difference, an example, and when each one updates stock.
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Try Inventory Invoice freeTwo documents sound almost the same and do different jobs: the purchase order and the purchase bill. Mix them up and your stock count and your payables both drift.
The short answer
- A purchase order (PO) is you asking the supplier for goods. It is sent before the goods arrive.
- A purchase bill is the supplier's invoice for goods you received. You record it after delivery.
One is a request, the other is a record of what actually happened.
An example
You run a stationery shop and need 200 notebooks.
- You send a PO: 200 notebooks at ₹40 each. Nothing has arrived, so nothing changes in your stock or your accounts yet.
- The supplier delivers 180 and sends their invoice for 180.
- You record a purchase bill for 180 notebooks. Now stock goes up by 180 and you owe the supplier ₹7,200 (plus GST).
The PO said 200 and the bill says 180. That is normal — and it is the reason the two are kept separate.
When stock should change
On the bill, not on the PO. A PO is only a promise to buy. If stock went up when you created it, your shelf count would show goods that have not arrived. Stock goes up when the goods are received and the bill is entered.
Do you need both?
- A PO helps when you order in bulk, from the same suppliers repeatedly, or want a written record of what you asked for and at what price.
- You can skip it when you pick things up on the spot, or the order is small and informal. A purchase bill is the one you cannot skip: it is what records stock-in, your payable and the GST you paid.
What to look for in your tools
- A PO that converts into a bill in one step, so you don't retype the items.
- A bill that adds to stock automatically.
- Bills that show what you still owe each supplier.
- GST captured on the purchase, since you may be able to claim credit on it (check with your CA).
Related: billing software with stock management.
Do it in one place
In ReplyDost Invoice you can raise a purchase order, convert it into a purchase bill when the goods arrive, and your stock and payables update from the bill.
Try it free on invoice.replydost.in → — 5 purchase bills a month included.
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