Purchase Order vs Quotation: What's the Difference
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Create Free Purchase OrderA quotation is the price a vendor proposes before any commitment. A purchase order is the buyer's formal confirmation to go ahead at that price. The quote comes first and can still change; the PO turns it into a fixed commitment on price, quantity, and delivery. If you send quotes to clients for a living, a PO coming back from a client is your signal to start the job, not just a nice-to-have paper trail.
Key takeaways
- A quote proposes a price. A purchase order commits to one. They're different stages of the same transaction.
- The usual order is: request, quote, purchase order (the buyer's acceptance), delivery, invoice.
- A client issuing a PO after accepting your quote is a green light to start work, but check it matches your quote first.
- A verbal or emailed "go ahead" isn't the same as a PO. Corporate and government clients in particular often won't process payment without one on file.
- Not every job needs a PO. For small or one-off work, an accepted quote plus a deposit is usually enough.
Quotation vs Purchase Order, Side by Side
| Quotation | Purchase order | |
|---|---|---|
| Sent by | The vendor or service provider | The buyer |
| Sent when | Before any commitment | After the buyer accepts the quote |
| Purpose | Proposes a price for the work or goods | Confirms the order at that price |
| Can it still change | Yes, until accepted | Only with mutual agreement |
How the Two Documents Fit Together
A typical transaction runs through both documents in order. A buyer asks for pricing, the vendor sends a quotation, and if the buyer wants to proceed, they issue a purchase order that references the quote and locks in the price and scope. The vendor delivers against the PO, then invoices, ideally quoting the same PO number so the final bill is easy to check against what was agreed.
If You Send Quotes and a Client Sends You a PO Back
If you quote for a living, an incoming PO from a client is effectively their signature on the deal. Before you start the job, check the PO against the quote you sent: same scope, same quantities, same price. A client's procurement system sometimes rounds a number or drops a line item when converting your quote into their PO, and it's far easier to flag that before the work starts than to argue about it once the invoice is out.
When You Don't Need a PO at All
A PO earns its keep for corporate and government clients, whose procurement and payment systems are often built around having one on file, and for any order sizeable enough that a price or scope dispute would actually hurt. For a small, one-off job with a client you deal with directly, an accepted quote and a deposit does the same job without the extra paperwork.
Frequently asked questions
Is a purchase order the same thing as accepting a quote?
It serves the same purpose: formal confirmation to proceed. A PO is just the buyer's own document format for recording that acceptance, often required by corporate or government procurement processes.
Can a purchase order have different terms than the quote it's based on?
It shouldn't without agreement from both sides. If a PO changes the price or scope from what was quoted, treat that as a new negotiation, not an automatic acceptance.
Do I need to issue a purchase order for every quote I accept?
No. It's most valuable for larger orders, recurring suppliers, or clients whose payment process requires one. A small one-off purchase can often skip it.
What should I do if a client's PO doesn't match my quote?
Flag the difference before starting the work and ask for a corrected PO. Starting the job against a PO that doesn't match your quote makes any later dispute your word against theirs.
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