Purchase order (PO) number
A purchase order number is the reference a client's procurement system issues to authorise spending with a supplier. Many mid-sized and large clients will not pay an invoice that does not quote a valid PO, whatever the contract says, so it has to be captured before the first invoice.
The PO is raised inside the client once the spend is approved. A perm placement usually has one PO for the fee. A contract usually has one PO with a value limit, a date limit or both, covering the assignment. When the invoice arrives, the client's accounts payable team matches it to the PO, and often to a record that the work was received, which for a contract is the approved timesheet. An invoice that cannot be matched goes back to the hiring manager, or sits in a queue.
Here is how a PO runs out. A client raises a PO for £85,800 to cover a six-month contract at £660 a day, 130 working days. The contract is extended by three months at the same rate, about £42,900 more. Nobody asks for a new PO, and the first invoice of the extension is rejected by the client's system, not because anyone disputes it but because there is nothing left to match it against. It waits while the hiring manager raises a new PO, and the agency funds the contractor's pay meanwhile.
Most PO problems are about where the number lives. It arrives in an email to the consultant and never reaches the invoice. The invoice goes to the hiring manager instead of the accounts payable mailbox. The PO covers one cost centre and the contractor moved to another. Or the client wants a separate PO for each contractor, and one invoice covers three. It is also worth checking whether the PO value is net or gross of VAT: a PO sized at the net contract value, matched against invoices that include VAT, runs out a sixth of the way early.
The fix is procedural. Treat the PO as part of the placement rather than the invoice: record the number, its value and its end date when the placement is confirmed, check it at every extension, and send invoices to the named billing contact the client's accounts team uses.
How Vayora handles it
Vayora holds a PO number on an invoice and prints it on the PDF as the client's purchase order reference, and invoices are sent to the client's billing contact where one is set rather than the hiring manager. At the moment the PO is entered when creating an ad hoc invoice, such as a perm fee. Invoices raised automatically from approved contract timesheets do not yet pick up a PO from the placement, which is a gap to know about for PO-driven contract clients.