AccPilotPurchase order vs delivery order vs invoice
What a purchase order, delivery order, invoice and official receipt each prove, the three-way match with a worked RM example, and what to keep together.
A client’s year-end box usually has all four in it. A carbon copy of a purchase order. A pink delivery order with a lorry driver’s signature, folded into quarters. The supplier’s invoice, sometimes two copies of it. And an official receipt from the supplier, stapled to nothing. Four pieces of paper about one purchase, in four different corners of the box.
The firm’s staff then have to work out which belong together, which one to key, and whether the client actually got what it paid for. If nobody matched them at the time, that last question is very hard to answer a year later.
The four documents, in order
A normal credit purchase goes through four steps, and each step leaves a document behind.
1. Purchase order (PO). The buyer writes it before anything happens. It says: we want these items, in this quantity, at this price, delivered here. The supplier now knows exactly what was asked for. Many small clients skip it and order by phone, so later disputes come down to “I never ordered that”.
2. Delivery order (DO). The supplier issues it with the goods. It lists what was actually sent. When the client’s storekeeper signs and chops it, that copy is the proof the goods arrived. A DO usually shows quantities only, not prices.
3. Invoice. The supplier’s bill. It says what is owed, by when, and the tax charged if the supplier is SST-registered. This is the document the purchase is recorded from.
4. Official receipt (OR). The supplier issues it after payment. It proves the supplier received the money. For bank transfers many suppliers don’t bother, and the bank statement plus the client’s own payment voucher does that job instead.
| Document | Who issues it | What it proves | What it doesn’t prove |
|---|---|---|---|
| Purchase order | Buyer | What was ordered, at what agreed price | That anything arrived |
| Delivery order | Supplier, signed by buyer | What was delivered, and when | What it costs |
| Invoice | Supplier | What is owed, and the due date | That the goods arrived |
| Official receipt | Supplier, after payment | That the supplier was paid | What the payment was for, unless it quotes the invoice |
The same set seen from the client’s sales side is the mirror image: a customer’s PO comes in, the client issues the DO, the invoice and later the official receipt. Our guide to the official receipt template covers what a receipt should show.
Invoice vs receipt: the one clients mix up most
An invoice asks for money. A receipt confirms money was received. A cash purchase at a hardware shop is often one slip that does both, a “cash bill” or “cash sale” invoice marked paid. A credit purchase is two separate documents, usually weeks apart.
For the books, the invoice is what gets posted as the purchase. The receipt or the bank record is what clears it. A file with only a receipt and no invoice tells you money went out, but not always what for.
The three-way match
Larger clients check three documents against each other before they pay: the PO, the DO and the invoice. If all three agree on item, quantity and price, the invoice is approved. If they don’t, someone finds out why before the money goes.
A made-up example. Syarikat Binaan Jaya orders cement from a supplier.
- PO: 100 bags at RM22.00 a bag = RM2,200.00.
- DO, signed at the site: 95 bags received. Five bags short.
- Invoice: 100 bags at RM23.00 a bag = RM2,300.00.
Two things are wrong: the quantity and the price. The amount the client should pay is what arrived, at the price agreed:
| RM | |
|---|---|
| Amount on supplier’s invoice (100 × RM23.00) | 2,300.00 |
| Less: 5 bags not delivered (5 × RM23.00) | (115.00) |
| Less: price difference on 95 bags (95 × RM1.00) | (95.00) |
| Amount that should be paid (95 × RM22.00) | 2,090.00 |
The client should ask the supplier to correct the invoice or issue a credit note for RM210.00, and pay RM2,090.00. Without the PO, nobody would have noticed the price change. Without the signed DO, nobody could prove the short delivery. How the credit note then reduces the supplier balance is covered in credit notes and debit notes.
Most small clients don’t run a formal three-way match, and that’s fine for routine buys. It is worth insisting on for stock, building materials and anything delivered in parts.
What the tax rules ask you to keep
LHDN’s Public Ruling 4/2000 for companies defines records to include “invoices, vouchers, receipts and such other documents as are necessary to verify the entries in any books of account”. It does not name POs or DOs. But when an entry is questioned, such as a large stock purchase or a claim for goods that were never received, the PO and signed DO are often exactly what verifies it. Treat them as part of the record.
The same ruling says that where computers are used to record transactions, original source documents such as invoices and receipts should be retained. Under section 82 of the Income Tax Act 1967 the records are kept for 7 years. For SST-registered clients the Sales Tax and Service Tax Acts add their own 7-year rule and require paper records to be kept in original form after scanning.
So the originals stay. What you don’t need is glue, A4 sheets or a photostat of every DO.
What to keep with what
A simple rule: one purchase, one set, joined by the invoice number.
- The set. PO, signed DO, invoice, any credit note, and the proof of payment (official receipt, or payment voucher plus bank line). If the client has no PO, the set is just DO, invoice and payment.
- The key. Write the supplier’s invoice number on the DO and the payment voucher if they don’t already show it. That one number links everything.
- The copy. Snap or scan the set when it comes in, while the carbon copy and the thermal slips are still readable. The digital copy is the working copy: the one you read, search and send to the auditor.
- The originals. Into that month’s envelope for the client, in date order. They don’t need to be touched again unless someone asks.
- The search. Every document findable by supplier, date and amount, not only by folder name.
A short checklist before a purchase is posted:
- Is there an invoice, not only a DO or a receipt?
- Does the quantity on the invoice match the signed DO?
- Does the price match the PO or the agreed quote?
- Is there a credit note for any shortfall or return?
- Is the payment linked to the invoices it settles?
Where AccPilot fits
AccPilot handles the reading and filing part of this. Invoices, delivery orders, receipts and statements come in by web upload, phone snap, email or the upload link you send the client. AccPilot reads the vendor, date, amounts, tax and line items, and marks each document Ready or Check with the reason. It matches the client’s bank statement lines to the documents and lists the payments with no document behind them as a chase list. Your staff review and export one clean Excel that imports into your accounting software, and every document stays searchable by vendor, date and amount for 7 years. More on the payables side in handling supplier invoices.
The matching judgement stays with your firm: whether a short delivery was really short, whether a price change was agreed, and whether to pay. AccPilot takes away the sorting and keying so that judgement gets the time.
To see it on a real stack of your clients’ invoices and delivery orders, book a free demo.