A purchase order is just a document essentially equivalent to a seller facing invoice; where an invoice is the buyer facing piece of transaction documentation.
When you fill your cart at Amazon, your submitted cart is your purchase order. Amazon processes your purchase order and issues you an invoice.
Payment method is separate from this documentation but is typically indicated in the documents.
A purchase order is just paperwork, it's the basis of the contract between buyer and seller, an accepted and, likely, signed purchase order is generally used as a contract or part of a contract. In B2B transactions, terms (item, item quantity, delivery, timing, payment method) are negotiated, you can't negotiate with Amazon; you just fill your cart and submit your purchase order.
This is a typical B2B buying process*:
- A buyer will send out an RFP (Request for Proposal) or RFQ (Request for Quote) to multiple vendors.
- If this is an established vendor relationship these terms are already enshrined in some sort of contract you can just skip to number 4 and submit the purchase order.
- Many vendors will respond and indicate various pricing differences based on payment method
- The buyer may then begin to negotiate terms
- Ex1: I'll pay in cash this week but the discount needs to be 7% not your indicated 2%.
- Ex2: I'll pay you the first $1,000 now via corporate Amex and the remainder as COD (Cash on Delivery)
- Ex3: Your rush fee of $1,000 to deliver in 15 days is too high, I'll pay $800 rush fee for delivery in 20 days, but if delivery occurs after 20 days I take a 20% discount.
- Terms are accepted by both parties; buyer submits the purchase order
- This is now a contract between buyer and seller, the purchase order may include various breach or underperformance terms (a cancellation fee, or late delivery discount, etc).
- Seller will now incur costs to begin work in reliance on the purchase order.
- Buyer will begin other preparations in reliance of delivery.
- Vendor begins work in consideration of the purchase order
- Vendor has likely not been paid in full at this point
- Vendor delivers including an invoice based on the terms of the purchase order
- Payment is now due to the vendor
The purchase order can include all sorts of terms. It might require the buyer to buy a specified minimum number of units over the next year. Sprint did this with Apple a number of years ago, if I remember correctly, in order to sell the iPhone at all Sprint agreed to buy $2B worth of iPhones over a 24 month period. So Apple was in possession of a purchase order from Sprint.
Separately it's typical for B2B to have wildly different payment terms than consumer transactions. You may google '10 net 30' this is typical B2B jargon that would indicate a cash discount if paid within 10 days of invoice. 1%/10 net 30, means buyer can take a 1% discount if the invoice is paid in 10 days, otherwise the invoice is due as is in 30 days and after 30 days interest likely begins to accrue.
I suspect your point of confusion comes from reading about accounting, and the fact that the purchase order triggers some accounting entries based on it's value. In business accounting there's the concept of payables and receivables. A receivable is an asset of the company, I have a contract that says Joe will pay me $1,000 so I have a $1,000 asset to put on my balance sheet; and remind me to collect from Joe. A payable is the inverse, it's a liability saying I owe $1,000. Once this offer is accepted and there's a contract, the seller can book an asset called receivable for $X and the buyer books a liability called payable for $X because the PO has a value of $X. Once the seller receives some or all of the payment it will debit the receivable and credit the asset checking (or something similar) and now it's revenue. The purchase order is not payment, but it does have value from an accounting perspective.
* This is obviously just an example and not a intended to be a definitive outline of B2B buying, please don't comment about potential procedural nuance.