Delivery notes, purchase orders and credit notes explained

Beyond quotations and invoices, three documents keep trade between businesses organised. Here is what each does and who sends it.

Purchase order (sent by the buyer)

A purchase order (PO) is the buyer's official order: what they want, how many, at what price, and when. When the supplier accepts it, it usually forms part of the agreement. Buyers give each PO a number and ask suppliers to quote it on their invoice, which makes invoices easy to match and approve. Create one with the purchase order generator.

Delivery note (sent with the goods)

A delivery note (or packing slip) travels with the goods and lists what was sent: items, codes and quantities, usually without prices. The customer checks the goods against it and signs to confirm they arrived in good condition. The signed copy is your proof of delivery if there is a dispute. Create one with the delivery note generator.

Credit note (sent by the seller to correct an invoice)

A credit note reduces or cancels an amount you invoiced, for example because goods were returned, an item was damaged, a discount was agreed after invoicing, or the invoice contained an error. It references the original invoice number. Many tax systems expect a credit note rather than editing or deleting the original invoice, so that the records stay complete. Create one with the credit note generator.

How they fit together

1. Seller sends a quotation.
2. Buyer sends a purchase order.
3. Seller ships goods with a delivery note.
4. Seller sends an invoice quoting the PO number.
5. If something is returned or wrong, the seller issues a credit note.
6. Buyer pays; seller can send a receipt.

Three-way matching

Many businesses check three documents before paying a supplier: the purchase order (what was ordered), the signed delivery note (what actually arrived) and the supplier's invoice (what is being charged). If quantities or prices don't match, the difference is queried before payment. Even small businesses benefit from this habit; it catches short deliveries and pricing errors.

Common mistakes

• Not getting the delivery note signed, which leaves no proof of delivery if goods are later disputed.
• Invoicing without the customer's PO number, which can delay payment for weeks in larger companies.
• Changing an old invoice instead of issuing a credit note.