There are several reasons why companies use POs.

POs allow buyers to clearly and explicitly communicate their intentions to sellers, and sellers are protected in case of a buyer's refusal to pay for goods or services. For example, Alex works for company A and orders parts from company B. The seller assumes that Alex's boss consents. If Alex is not entitled to this order - perhaps due to a miscommunication with their boss - the order can be canceled by either party. Depending on the type of product that is delivered and at what stage the PO is canceled, Company B may be entitled to production (labor, raw materials, etc.) and shipping and handling costs.