In accounts payable, what is meant by a PO invoice and how is it related to the purchase order process?

Introduction / Context:
In organisations that use purchase orders, accounts payable often distinguishes between PO invoices and non PO invoices. This question asks what a PO invoice is and how it fits into the purchase order process. It is fundamental for understanding three way matching and controls in the procure to pay cycle.

Given Data / Assumptions:

• The organisation issues purchase orders to suppliers for goods or services.
• Suppliers then send invoices for what has been supplied.
• Goods or services received may be documented through goods receipt notes or service entry sheets.
• The accounts payable system supports matching between these documents.

Concept / Approach:
A PO invoice is a supplier invoice that references a purchase order and is processed through a matching procedure. In a typical three way match, the accounts payable clerk matches the PO invoice with the purchase order and the goods receipt. The system checks that item quantities and prices on the invoice agree with what was ordered and received. Only after successful matching and resolution of any discrepancies is the PO invoice approved for payment. This provides strong control over payments and reduces the risk of paying for goods that were never ordered or received.

Step-by-Step Solution:
Step 1: Recognise that PO stands for purchase order and that a PO invoice should be an invoice related to a purchase order.Step 2: Recall the procure to pay process: purchase order issued, goods received, supplier invoice received, and invoice matched and paid.Step 3: Identify that in this flow, the invoice that is matched to the purchase order and goods receipt is called a PO invoice.Step 4: Compare this understanding with the answer choices. Option A describes a supplier invoice matched to a purchase order and goods receipt before approval and payment.Step 5: Confirm that the other options describe internal memos, sales invoices, or tax notices, which do not match the definition of a PO invoice.

Verification / Alternative check:
In many ERP systems, accounts payable screens have separate entry types for PO invoices and non PO invoices. PO invoices require selection of a purchase order number so that the system can retrieve order lines and quantities, while non PO invoices are entered directly with account coding. This practical distinction confirms that a PO invoice is a supplier invoice linked to and matched with a purchase order, as described in option A.

Why Other Options Are Wrong:
Option B treats a PO invoice as an internal memo that never goes to accounts payable, which is not correct because invoices by definition come from suppliers and must be processed by accounts payable. Option C shifts the focus to customer invoices for sales orders, which are part of the order to cash cycle, not the procure to pay cycle. Option D suggests PO invoices are tax notices, which is unrelated to the purchasing process.

Common Pitfalls:
Some learners confuse PO invoices with purchase orders themselves or with internal purchase requisitions. Others mix up PO invoices with sales invoices. To avoid confusion, always remember that in accounts payable, a PO invoice is a supplier invoice that quotes a purchase order and is processed through matching before payment.

Final Answer:
A PO invoice is a supplier invoice that is matched to a purchase order and usually to a goods receipt before it is approved and paid.