Invoicing against purchase orders for commercial clients

To invoice against a purchase order, put the client's PO number on the invoice, bill only what the PO covers, and match its descriptions, quantities and prices line for line. Send it to the accounts address the PO names. Many councils and larger firms run "no PO, no pay": an invoice without a valid PO number is returned unpaid.

What is a purchase order, and why does it matter for getting paid?

A purchase order is the client's own authority to spend: a numbered document that says what they're buying from you, how many, at what price. Their accounts team pays invoices that match an open PO. An invoice that doesn't match goes back to whoever ordered the work, and your payment clock stops while it sits on their desk.

Councils, housing associations, facilities firms and main contractors all work this way, and so do plenty of shop and restaurant chains. If you're moving from domestic work into commercial, this is one of the first habits to change. See domestic to commercial work.

How do you get the PO before you start?

Ask for it in writing as soon as the quote is accepted, and don't book the job until it arrives. Site managers often mean to raise one and forget. A short message the day they say yes saves you weeks later.

Hi name,

Thanks for accepting quote quote number for short description, e.g. replacement fascia sign, unit 4.

Before we book the install, could you send over the purchase order number? We'll need it on the invoice so your accounts team can pay it without delay.

For reference, the quote total is £amount + VAT, split as:
line 1 and price
line 2 and price

We're pencilled in for date once the PO comes through.

Thanks,
your name

When the PO arrives, check it against your quote before you start. If the PO says 4 units and you quoted 5, sort it now. A London electrical contractor we work with, running about ten live commercial jobs, wanted a tracker per job showing PO, invoiced, outstanding and final account for exactly this reason: the mismatch is cheap to fix before the work and expensive after.

How do you match your invoice to the PO?

Line for line. The person paying you may be in a shared service centre who's never seen the site. They'll put your invoice next to the PO and look for differences.

In Xero, the PO number goes in the invoice's Reference field so it shows on the PDF and in your aged debtors report. Whatever software you use, make it searchable: when the client's accounts team rings, they'll quote the PO number, not your invoice number. If the work falls under the VAT domestic reverse charge, see reverse charge invoice wording.

How do you bill a PO in stages, and handle extra work?

Bill against the PO in parts if the contract allows it, and keep a running balance on each invoice. Extra work goes on a new PO or an amended one, never squeezed into the original.

On commercial maintenance work, much of the time spent on invoicing is the back-and-forth when an invoice doesn't match the PO.

If the client won't raise a new PO for a variation, put the variation in writing with a price anyway, and ask who will authorise it. Then follow how to price variations so the number stands up.

When should a commercial client pay you?

When the contract says, within limits. If no date was agreed, a business payment is late 30 days after the client receives your invoice or you finish the work, whichever is later. Agreed terms between businesses are usually no more than 60 days, and public authorities usually no more than 30.

For construction contracts, the Construction Act's payment notice and pay less notice rules sit on top of this, and a client can't make your payment conditional on them being paid by someone else unless that party is insolvent. See payment and pay less notices for the deadlines, and main contractor payment terms for what's normal.

What do you do when a PO invoice is rejected?

Find out exactly which line failed, fix that, and resend the same day with the same invoice number if your software allows a correction, or a credit note and a new invoice if not. Don't argue the work; argue the paperwork.

1. Ask for the reason in writing.

   "PO closed", "quantity mismatch" and "wrong entity" each have a different fix.

2. Check the PO is still open.

   Closed POs need the person who ordered the work to reopen or replace them.

3. Correct and resend.

   Quote the original send date in your email so the client can see how long it's been with them.

4. Log it on your tracker.

   Note the date of rejection and resubmission, so you know when it's overdue by the contract's terms.

Common questions