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What is a sales order?
A sales order is a document generated by the seller upon receiving a purchase order from a buyer specifying the details about the product or service along with price, quantity, buyer details like the shipping address, billing address, mode of payment and terms and conditions.
In general practice, businesses follow the steps below.
- The seller sends a quote to the customer.
- If accepted, the customer sends the seller a purchase order.
- The seller creates a sales order based on the purchase order.
- The customer may request a sales order to view the exact details of the products, price, terms and delivery dates. Most businesses usually skip this test.
- After the seller ships the products, they create an invoice from the sales order.
Difference between a sales order and a purchase order
The buyer sends a purchase order to the seller detailing the products to be purchased, quantity, price, PO number, delivery and payment terms and shipping address.
The seller creates a sales order upon receipt of the purchase order.
The seller can input the data manually from the purchase order or automate it with a sales order automation software. Automation software will convert POs to SOs in one-click reducing costs, time and eliminating the room for error.
The importance of a sales order
Sales orders are vital to inventory and order management systems. When a customer sends you a purchase order or places an order on your eCommerce store, your business becomes obligated to fulfil the order.
A sales order gives you information on your inventory. Whether the products are in stock, if not how many are on backorder. This allows your purchasing department to make educated forecasts and purchase from your distributors.
Enter a sales order into your system as soon as possible. Do not err by using the purchase order as a sales order as this will result in chaos in the long run not only with your purchasing department but also accounting.
The billing department refers to the sales orders to verify related details and the authenticity of the sale and then generates invoices. Businesses have automated the creation of invoices by converting sale orders to invoices. Errors in pricing and quantity in the sales order will lead to accounting errors.
When reviewing a company’s financial statements, financial auditors often inquire about sales order documents. Working capital loans are also given based on the confirmed sales order value of a business.
Benefits of sales order automation
1. Minimize the work time
Paperwork is one of the most time-consuming tasks faced by sales teams. Sales order automation imports or converts purchase orders sent by customers and creates sales orders in your ERP systems. This eliminates the re-entering of data from the purchase orders reducing time and effort considerably. A single entry in the system can be used by multiple departments like the sales team, procurement, warehousing, invoicing, accounting and customer service.
2. Enhance customer service
Your sales reps can have important information related to your customers at their fingertips as opposed to sifting through a ton of paperwork. Customer query redressal is quick and efficient. Sales order automation reduces errors and inconsistencies related to customer orders and billing leading to happier customers.
3. Scale up and down easily
Sales order automation enables you to scale without worrying about capability or capacity. Therefore when orders start pouring in you will be able to swiftly process them, without the need to increase your customer staff immediately.
4. Process data from anywhere
Cloud-based applications allow you to process data and access information from anywhere. Your sales reps can access information if needed on their sales calls, they will not be dependent on internal sales reps for data. Customers will be happy with the efficiency and speed of your staff.
Sales order automation streamlines workflow and reduces processing time, right from the point of sale to verification to inventory management to delivery and long-term customer retention.
It reduces order processing times by 50% which means that more orders can be processed in the same timeframe.
The right sales order processing software can take your business places. If you want these benefits for your VAR business too, contact VARStreet today.