Purchase order (PO)
A purchase order is a document committing to buy materials or subcontracted work at agreed quantities and prices, tied to a job.
POs turn intended spend into a committed cost and create the paper trail that lets you match a vendor's invoice (and later a bank charge) back to the right job. They're the backbone of accurate, real-time job costing.
Related terms
- Committed cost — A committed cost is money you're obligated to spend but haven't been billed for yet — typically an open purchase order or signed subcontract.
- Cost codes — Cost codes are standardized buckets (e.g. materials, labor, subs, equipment — often by phase) used to categorize every job cost so you can compare actuals to the estimate.
- Job costing — Job costing is tracking the actual costs of a specific job — materials, labor, subs, and other expenses — against what you estimated, so you know the real profit on that job.