How LPO Payment Works in Nigeria: A Supplier Guide

Receiving a Local Purchase Order does not usually mean the money has already been paid. It means the buyer has formally authorised a purchase under the terms stated in the document.

The supplier still needs to deliver correctly, submit the required documents and follow the buyer's payment process.

The typical LPO payment process

1. The buyer issues the LPO

Check the document before accepting it. Confirm:

Buyer's legal name
LPO number and date
Items, quantities and specifications
Agreed prices
VAT treatment
Delivery location
Delivery deadline
Payment terms
Contact person

If anything differs from your quotation, ask for a written correction.

2. The supplier accepts the order

Some buyers require a signed acknowledgement. Others treat delivery as acceptance. Keep an email or signed copy showing that both sides agreed to the terms.

3. Goods or services are delivered

For goods, obtain a signed delivery note or waybill. For services, request an acceptance note, job completion certificate, timesheet or other evidence required by the buyer.

Do not leave without confirming who received the delivery and the date.

4. The supplier issues an invoice

The invoice should quote the LPO number exactly. It should also match the approved quantity and price.

If the buyer ordered 100 units and accepted only 80, do not invoice 100 without written approval. Resolve differences first.

Use the free invoice generator to create the document and read the invoice number guide before choosing a sequence.

5. The buyer checks the documents

Accounts payable may perform a three-way match:

LPO or purchase order
Delivery or acceptance record
Supplier invoice

If the three records do not agree, payment may be placed on hold.

6. Deductions are applied

The buyer may deduct withholding tax where required. VAT may also be handled according to the transaction and applicable rules. Ask for the relevant credit note or evidence of remittance when a statutory deduction is made.

Read the withholding tax invoice guide and confirm the current treatment with a qualified adviser.

7. Payment is approved and released

The payment term may start from the invoice date, delivery date or the date a complete document pack is accepted. Read the LPO carefully.

“Net 30” should be tied to a clear starting point. If the document is vague, ask the buyer to confirm the expected payment date in writing.

Documents a supplier may need

Requirements differ, but a buyer may request:

Signed LPO
Invoice
Delivery note or waybill
Job completion or acceptance certificate
Tax ID
CAC documents
Bank details
Withholding tax information
Supplier registration record

Government procurement may involve additional steps. The Bureau of Public Procurement regulates federal public procurement, and its standard bidding documents show the formal nature of public-sector purchasing. Follow the exact requirements of the relevant procuring entity.

What to do when payment is late

Start with a polite message that includes:

LPO number
Invoice number
Delivery date
Invoice submission date
Agreed due date
Amount outstanding

Ask whether any document or approval is missing. Use the payment reminder templates to keep the message firm and professional.

Common LPO payment mistakes

Delivering before confirming a genuine LPO
Failing to check the buyer's name and address
Omitting the LPO number from the invoice
Changing the price without written approval
Losing the signed delivery note
Sending the invoice to the wrong department
Assuming that an LPO guarantees immediate payment

Frequently asked questions

Is an LPO proof of payment?

No. It is an order or purchasing authorisation. Payment normally follows delivery, invoicing and approval.

Should I start work with only an LPO?

That depends on the buyer, value and risk. Verify the order, the authorised contact and the payment terms before committing money.

What if the invoice amount differs from the LPO?

Ask the buyer to issue an amendment or additional approval. Do not assume accounts payable will accept the difference.