Every business relies on documents to buy goods, sell products, approve spending and keep accurate financial records. Understanding what each document does helps finance teams, purchasing departments and business owners work more efficiently while maintaining strong financial controls.
This guide explains the most common business documents you'll encounter throughout the purchasing and accounts payable process, including purchase orders, invoices, purchase requisitions, credit notes and more.
Whether you're new to finance or simply want a quick reference, these definitions will help you understand how each document fits into the purchasing lifecycle.
Purchase Order (PO)
A Purchase Order (PO) is a document created by a buyer that formally requests goods or services from a supplier.
Once accepted by the supplier, it becomes a legally binding agreement outlining:
- The products or services being purchased
- Quantities
- Agreed prices
- Delivery dates
- Payment terms
- Any special conditions
Purchase orders help businesses control spending, prevent unauthorised purchases and provide an audit trail from request through to payment.
Purchase Requisition (PR)
A Purchase Requisition is an internal document raised by an employee or department requesting permission to purchase goods or services.
Unlike a purchase order, a purchase requisition is not sent to the supplier. Instead, it is reviewed internally before approval.
A purchase requisition typically includes:
- The items required
- Quantities
- Expected cost
- Business justification
- Required delivery date
Once approved, the purchasing team usually converts the requisition into a purchase order.
Quotation (Quote)
A Quotation is a document provided by a supplier that details the price for supplying specific goods or services.
It normally includes:
- Product descriptions
- Unit prices
- Total cost
- Delivery charges
- Validity period
- Payment terms
Businesses often obtain multiple quotations before deciding which supplier to use.
Contract
A Contract is a legally binding agreement between two or more parties that defines the terms and conditions of a business relationship.
Contracts commonly include:
- Scope of work
- Pricing
- Service levels
- Payment schedules
- Responsibilities
- Termination clauses
Purchase orders often reference an existing contract.
Sales Order (SO)
A Sales Order is created by the seller after receiving a customer's purchase order.
It confirms that the order has been accepted and allows the supplier to begin fulfilment.
A sales order typically contains:
- Customer information
- Products ordered
- Quantities
- Prices
- Delivery instructions
It acts as the supplier's internal instruction to prepare and dispatch the order.
Delivery Note
A Delivery Note accompanies goods when they are delivered to the customer.
It lists:
- Items supplied
- Quantities delivered
- Delivery address
- Delivery date
The recipient often signs the delivery note as confirmation that the goods have been received.
Delivery notes generally do not include pricing information.
Goods Received Note (GRN)
A Goods Received Note (GRN) is an internal document created by the buyer after checking that delivered goods match the purchase order.
It confirms:
- Goods have been received
- Quantities are correct
- Items are undamaged
Many businesses use the GRN as part of three-way matching, where the purchase order, GRN and invoice must all match before payment is approved.
Invoice
An Invoice is a document issued by a supplier requesting payment for goods or services provided.
An invoice normally includes:
- Supplier details
- Customer details
- Invoice number
- Invoice date
- Description of goods or services
- Quantities
- Prices
- VAT or tax
- Payment terms
- Total amount due
Invoices form the basis of the accounts payable process and are usually matched against the purchase order and goods received note before payment is authorised.
Credit Note
A Credit Note is issued by a supplier to reduce or cancel all or part of a previously issued invoice.
Credit notes are commonly used when:
- Goods are returned
- Items are damaged
- An invoice contains an error
- An overpayment has been made
The credit can usually be applied to future invoices or refunded.
Statement
A Supplier Statement summarises all transactions between a supplier and customer over a specific period.
It typically shows:
- Outstanding invoices
- Credit notes
- Payments received
- Current account balance
Finance teams use supplier statements to reconcile accounts and identify missing invoices or overdue payments.
Payment Remittance Advice
A Payment Remittance Advice (or Remittance) is sent by a buyer after making payment to a supplier.
It informs the supplier:
- Which invoices have been paid
- Payment amount
- Payment date
- Payment method
- Any deductions or adjustments
Remittances help suppliers allocate incoming payments correctly.
Expense Claim
An Expense Claim is submitted by an employee to request reimbursement for business-related expenses.
Typical expenses include:
- Travel
- Accommodation
- Meals
- Mileage
- Office supplies
Most expense claims require receipts and manager approval before reimbursement.
Receipt
A Receipt confirms that payment has been received for goods or services.
Unlike an invoice, which requests payment, a receipt proves that payment has already been made.
Receipts commonly include:
- Date of payment
- Amount paid
- Payment method
- Supplier details
- Description of goods or services
They are commonly used for expense claims and accounting records.
Letter of Credit
A Letter of Credit (LC) is a financial document issued by a bank that guarantees payment to a seller, provided the agreed terms have been met.
Letters of credit are commonly used in international trade to reduce risk for both buyers and sellers.
To receive payment, the seller must present specific documentation—such as shipping documents, commercial invoices and certificates of origin—within the agreed timeframe.
How These Documents Work Together
In a typical purchasing process, the documents follow a logical sequence:
- Purchase Requisition
- Quotation (optional)
- Contract (where applicable)
- Purchase Order
- Sales Order
- Delivery Note
- Goods Received Note
- Invoice
- Payment Remittance Advice
- Supplier Statement
- Credit Note (if required)
Together, these documents create a complete audit trail, helping businesses maintain financial control, reduce errors and ensure suppliers are paid accurately and on time.