In Nigerian B2B transactions, especially with large companies, government agencies, and multinationals, you will frequently hear about purchase orders (POs) and invoices. Many small business owners and freelancers are unclear about the difference - and that confusion can delay payment or create compliance issues.
This guide explains what each document is, when each is used, and how they fit together in a proper Nigerian B2B procurement cycle.
What Is a Purchase Order (LPO)?
A Purchase Order - often called an LPO (Local Purchase Order) in Nigeria - is a formal document issued by a buyer to a supplier that authorises the purchase of specific goods or services at an agreed price and quantity.
The PO is the buyer's commitment. It says: "We agree to buy X from you at price Y, under these terms."
When a supplier receives and accepts a PO, a binding contract exists - even before any goods change hands or invoice is issued.
Key characteristics:
- Issued by the buyer (not the supplier)
- Issued before delivery of goods or services
- Authorises the purchase
- Contains a PO/LPO number that both parties reference throughout the transaction
What Is an Invoice?
An invoice is a document issued by the supplier to the buyer requesting payment for goods or services already delivered (or, in some cases, being delivered in stages).
The invoice is the supplier's payment request. It says: "I have delivered what was agreed. Please pay me."
Key characteristics:
- Issued by the supplier (not the buyer)
- Issued after delivery (or per agreed milestone)
- Requests payment
- References the original PO/LPO number
Side-by-Side Comparison
| | Purchase Order (LPO) | Invoice | |---|---|---| | Issued by | Buyer | Supplier | | Timing | Before delivery | After delivery | | Purpose | Authorise the purchase | Request payment | | Creates obligation | Buyer commits to purchase | Buyer commits to pay | | Contains | Item specs, agreed price, delivery terms | Items delivered, payment due, due date | | References | Can reference a quotation | Must reference the PO number | | VAT | May show expected VAT | Must show actual VAT if supplier is registered |
The Full Nigerian B2B Procurement Cycle
Understanding where POs and invoices fit in the full cycle helps avoid delays:
Step 1: Supplier sends a quotation with itemised pricing.
Step 2: Buyer's procurement team reviews and approves the quotation internally.
Step 3: Buyer's finance/procurement issues an LPO/PO to the supplier, referencing the quotation. The PO includes a PO number.
Step 4: Supplier receives the PO, confirms acceptance (in writing or by commencing delivery), and delivers goods or services.
Step 5: Supplier issues an invoice referencing the PO number.
Step 6: Buyer's finance team matches the invoice against the PO (and often a goods received note/GRN) - this is called three-way matching.
Step 7: Buyer approves and processes payment.
Common delay point: Invoice is rejected because it does not reference the correct PO number, the amount does not match the PO, or the description does not align with what was ordered. Always match your invoice exactly to the PO.
What If a Client Has Not Issued a PO?
Many small Nigerian businesses and informal clients do not issue POs. In this case:
- Reference the email or WhatsApp message where the purchase was agreed
- Or create your own quotation and ask the client to confirm acceptance in writing before delivering
- Do not begin work on a large order without some form of written agreement - a PO is the ideal form, but a signed quotation or email confirmation is better than nothing
For corporate and government clients, never deliver without an LPO. Nigerian corporate policy often requires a PO before payment can be processed - invoices without PO references may be refused by finance departments.
Invoice Requirements When You Have an LPO
When invoicing against an LPO, ensure your invoice includes:
- The LPO/PO number - prominently, near the top of the invoice
- The LPO date
- Exact matching descriptions - items on your invoice must match item descriptions on the PO
- Exact matching prices - do not invoice above the PO value without a revised PO
- VAT - if the PO included VAT, your invoice must show the same VAT breakdown
- Your TIN - corporate buyers require this for WHT processing
Invoice footer example:
Re: LPO No. GTB-LPO-2026-0412 dated 1 March 2026
What Is a Goods Received Note (GRN)?
A GRN is a document the buyer signs to acknowledge receipt of delivered goods. Together with the PO and invoice, it forms the three-way match that most Nigerian corporate finance departments require before approving payment.
If your client uses GRNs:
- Ensure the client signs and returns the GRN on delivery
- Keep a copy - it is proof of delivery and may be required to resolve payment disputes
Create Invoices That Match Your LPO
InvoiceGenerator.ng makes it easy to create professional, itemised invoices that reference your client's LPO - with VAT, TIN, and sequential numbering. Share via WhatsApp or email in seconds.
For more on the full Nigerian invoicing process, see our Nigerian Invoicing Guide.