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A purchase order (PO) is a crucial document in the purchasing process, typically involving two parties: the buyer and the seller. The process begins with negotiations on terms like type, volume, and price of goods and services, along with delivery dates. Once negotiations are complete, the buyer creates and sends the purchase order to the seller. If the seller accepts the terms, they send a confirmation back. At this stage, a legally binding contract is established between both parties. This summary outlines the purpose and significance of purchase orders in business transactions.