Why do I need a sales order?

May 16, 2014 at 3:11 PMIan Benoliel

A sales order is an internal document that records a sales to be made in the future. It helps the company plan for the resources that are required (inventory or labor) to complete the sale. The sales order records a customer's originating purchase order; in other words the customer's purchase order is the originating document which triggers the creation of the sales order. The sales order, sometimes abbreviated as SO, may be for products and/or services. Each sales order should have on it an order number, the customer name, billing and shipping addresses, customer purchase order number, order date, special instructions, due date and a listing of products and services together with their quantities and prices. A sales order is primarily used in the wholesale, distribution and manufacturing industries.

So you may be asking, why don’t I just do an invoice or sales receipt and bypass the sales order altogether? In certain circumstance, you can bypass the sales order if the sales is immediate (e.g. in retail). In all other cases a sales order should be created.

Typically, after the sales order is created, a pick ticket is generated to instruct the warehouse on which product to pick. Once the packing list is created you may determine which products are on ‘back order’.

The sales order is tremendously useful as a planning tool. With the sales order you can

  1. estimate future sales
  2. helps you estimate profitability on an order before accepting the order
  3. can be used send out an order confirmation
  4. assist customer service in tracking order status
  5. determine what stock needs to be ordered from suppliers
  6. for manufacturers, the sales orders can be used to plan production orders.
  7. determine your order fulfillment efficiency: e,g, Lead time - the time between the date that your customer placed the order and
  8. determine back orders - how many orders have shipped completed

All Orders by NumberCruncher is an inventory and order management system that help you manage sales orders.

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