Streamline Your Accounting with a Purchase Invoice Example for Accounting

Purchase invoice example for Accounting

guys welcome to bear bull guys in this video we'll be talking about the difference between an invoice and a purchase order so let's start with a process okay let's suppose that you are running a business and you make you make chairs okay now for chairs you need to order some wood okay so what you do is that you place an order with a vendor or a supplier as you call it you can also call it a vendor or a supplier okay so the one who will send you who will supply you with the wood so that you can make chairs okay so what you is that what you do is that you issue a purchase order so purchase order is a document used to order good services from a seller so in your case the seller is the one who is making the word okay so he will sell you the word so that you can make cheers okay so you will you being a business will prepare that purchase order you will send it to him and you will you in the purchase order you will mention the quality for example you need you need like 20 kg of wood so you will send it send that purchase order uh containing that description to the seller so it this purchase order of course it's issued by the buyer you are the buyer of the wood you will purchase you will buy the wood and it's sent to the seller or the vendor of the vendor and the purchase order comes before the invoice remember that invoice will come after this okay we'll talk about it shortly so it defines terms of the sales okay it defines how much wood do you need so after the purchase order when when you when you know that you need like 20 kgs of wood and you you you write that down and you send it to the seller that is called purchase order now once the seller receives the purchase order he the the document which is used to notify the buyer that is the business which is making chairs is that the the document which states that the payment is you for example you bought 20 kgs of wood for like 100 so the seller will now send you a bill for 100 so that bill is called invoice okay that bill is called invoice so it's a document used to notify the buyer that the payment is used so it is issued by the supplier or the vendor the one who will sell you the wood and it's sent to the buyer it will be sent to you because you are the buyer because you will make the chairs out of that wood and invoice is created after the purchase order it's very natural that once the supplier gets the order only then he can ascertain the uh the price which will at which at which he will sell his supplies so of course invoice comes after the purchase order and it confirms that the sale has occurred okay once the once the once the vendor or supplier sells you the good and he raises any voice your name that thing that means that the sale has occurred and of course after that you make you make the payment to the supplier so once again for you when you when you need something you you raise a purchase order okay the supplier gets the purchase order he determines what what goods need to be supplied and he supplies the goods to you and he will raise an invoice to you stating the the amount of payment which is due so you will you will see the invoice and you will make the payment so i hope you this clarified your concept and about the difference between an invoice and a purchase order for more videos do subscribe to bevel