How to invoice a corporate client that issues purchase orders

What a purchase order is, and why a company wants it on your invoice

A purchase order (PO) is a document the client issues to you. It says the company has approved spending a stated amount with you for a described piece of work, and it carries a reference number their system generated. Your quote is your offer. The PO is their formal yes.

The number matters because of how larger accounts payable departments work. Many of them match each incoming invoice against an approved PO before releasing money. If the invoice has no PO number, or a number that does not exist in their system, the invoice cannot be matched, and it tends to sit in a queue until someone chases it. Nobody is disputing that you did the work. The system simply has nowhere to file your invoice.

It helps to separate this from the tax rules. SARS does not require a PO number on a tax invoice. The VAT Act lists what a valid tax invoice must contain, and our guide to VAT invoice requirements walks through that list. A PO number is not on it. The requirement comes from your client's own payment process, which is why leaving it off cannot get you into trouble with SARS but can still hold up your money for weeks.

How to invoice against a purchase order in South Africa

Four habits cover almost every case.

Get the PO before you start. If a corporate client says "go ahead, the PO is coming", the work you do in the meantime is unprotected. Their approvers may not have signed off yet, and an invoice raised without a PO is the one most likely to be rejected. Politely asking for the number up front is normal for these clients. They deal with it all day.

Check that the PO matches your quote. Compare the amount, the description and the VAT treatment. A PO for R20 000 against a R24 000 quote is a conversation to have now, not after delivery. If the work grows, ask for an amended or additional PO before you do the extra work.

Put the PO number on every invoice, spelled exactly as they gave it. These numbers come in all shapes: 4500123456, PO-2026/0041, letters mixed with digits. Copy it, do not retype it from memory. One transposed digit is enough for their system to reject the match.

Never invoice above what the PO covers. A PO is a spending limit. If it covers R20 000 and you bill R21 500, most systems will not pay the invoice at all rather than pay the difference. If you are invoicing in stages, keep a running total of what you have billed against each PO.

The mistakes that stall payment

Most payment delays on PO work trace back to a short list:

• The PO number is missing, or it is on the quote but never made it to the invoice.
• The invoice total is higher than the PO value, often because of VAT or a late extra.
• The PO has expired, because some companies close a PO after a set date.
• The invoice went to the person who hired you instead of the accounts payable address.
• One PO was used for several jobs and the first invoice used up the balance.

None of these are hard to avoid, but they all happen after the work is done, which is when you least want to find out. Payment terms are the other half of the picture. Once the invoice is accepted, a corporate client will usually pay on its own terms, often 30 or 60 days, so see our guide to invoice payment terms in South Africa before you agree to them.

What we added to SortedNexus, and why

Our quotes and invoices already flowed well for individuals and small clients. The gap was the corporate client who needs a reference we had nowhere to put. The workaround is to squeeze the PO number into the notes field, which works until someone wants it where their payment team expects to find it.

So both the quote and the invoice now have an optional Client PO number field. It is plain text, up to 50 characters, because we did not want to guess what a valid PO number looks like and reject a real one. A few details we decided on:

• You can add it after the document exists. A PO often arrives after the client accepts your quote, so there is an edit control on the quote and invoice pages, not just a field on the creation form.
• It carries over when you convert a quote to an invoice. Enter it once on the quote and you do not have to remember it later.
• It prints where the client looks. It appears next to the dates on the PDF, on the invoice page your client opens from the email link, and in the email itself.
• It is on the free invoice builder too. You can add a PO number on the invoice builder without an account. Quotes need a Starter plan.

If your corporate work starts with a quote, begin on the quote builder. We wrote about why keeping quotes and invoices linked matters in quoting and invoice record keeping, and the PO number is one more reference that travels with the paper trail.

What this does not do

We want to be clear about the limits. SortedNexus records the PO number your client gives you. It does not create purchase orders, so if you need to raise POs to your own suppliers, that is not something it does today. It also does not check your invoice against the PO value, so keeping a running total of what you have billed is still on you. There is no search by PO number yet, and no warning if you send an invoice to a client who normally requires one. The PO number shows under the client name in your invoice and quote lists, which helps, but it is a reference field and not a matching system.

Sources

• ↗SARS: Value-Added Tax
• ↗SARS: Value-Added Tax Act 89 of 1991

Disclaimer: This article is general information about invoicing against purchase orders and about what SortedNexus records. How a particular company processes POs and invoices is set by that company, so confirm its requirements with its accounts payable team. It is not tax, accounting, or legal advice, and it does not replace advice from a qualified accountant.