What is a purchase order (PO)?
A purchase order is the client's formal commitment. Once a proposal is agreed, the client's procurement or finance team raises a PO that describes the work, names the agency, states the amount and the terms, and gives the whole thing a number. That number is the key to the client's accounts payable system: an invoice that quotes it is matched to the PO and paid; an invoice that does not is parked until someone finds out where it belongs. For a large brand, no PO usually means no payment, however much the marketing team loves the work.
Agencies also issue POs of their own, to crews, vendors and suppliers, for the same reason: to commit to a cost in writing and give the supplier a reference that the agency's accounts can match.
Why it matters
Why a purchase order matters
A PO is what turns an approved proposal into money that will actually arrive. It proves the budget exists, that the right people signed it off and that the client's system is expecting the invoice. Starting work without one is a leap of faith that agencies take more often than they should, and it is the single most common reason a finished, approved project goes unpaid for months. On the agency's own side, issuing POs to suppliers is how a producer controls the budget: a cost that has a PO is committed and visible; a cost agreed on a phone call is a surprise waiting for wrap.
The PO is also a scope document. It describes what was bought, and if the work changes, the PO has to change with it or the extra invoice will have nowhere to land.
In practice
How a purchase order works in practice
- 01
The agency sends the proposal with the number and the billing plan. The client approves and asks their procurement team to raise a PO against it, which usually requires the agency to be set up as a vendor: tax forms, bank details, insurance certificates, sometimes a supplier portal. The PO arrives with a number, an amount and the terms, and the producer checks that all three match the proposal before anything is booked.
- 02
Every invoice on the project then quotes the PO number and, where the PO is broken into lines, bills against the right line. When the scope changes, a change order is agreed and the client raises an amended or additional PO before the extra work is invoiced. At wrap, the cumulative invoicing should equal the PO total, which closes the PO on the client's side.
At RIOT
Purchase orders at RIOT
The number on the PO is the number we scoped. A project starts with the brief, a plan and a price follow within a couple of business days, and that is what the client's procurement team raises the order against. Krova, our production software, carries the bid through the budget and into delivery, so what the PO says, what the budget says and what the invoices say stay the same document.
Watch out
What people get wrong about purchase orders
Starting without one. The marketing lead's enthusiasm is not a payment instruction; the PO is. The second mistake is invoicing against a PO for more than it covers, or for work it does not describe, and discovering that the client's system has rejected the invoice without telling anyone. The third is the agency's own side: booking crew and vendors without a PO and finding, at wrap, that the budget has commitments nobody wrote down.
