In any B2C or B2B transaction, the sale order is a legally binding document between the seller and buyer. Usually, they are issued after a customer pays, but they can also be issued on credit.
A Sales Order is often issued based on the Purchase Order, and it contains details such as:
In supply chain management, issuing a sales order is mandatory. A seller is responsible for fulfilling a purchase order submitted by a customer. With large companies, this can become a complicated process. The purpose of sales orders is to provide that orders are fulfilled accurately by obtaining critical information from POs. Also, by making a sale order, a seller makes sure that their inventory is updated on time and correctly.
According to the Sales Order, the accountant sends a tax invoice to the buyer following e the fulfilment of the sale order.
Purchase orders obligate the buyer to acknowledge the delivery of goods in accordance with the specifications. Upon receiving the purchase order, the buyer makes a payment.
It is possible to issue a purchase order digitally or on paper. Digital purchase orders simplify the entire process by tracking purchase orders, processing payments, and reporting. Large businesses negotiate with suppliers, while small businesses use direct purchasing transactions.
The financial terms and other criteria in purchase orders can be more easily negotiated by large companies, reducing the need for frequent bargaining. A company also benefits from this when market conditions fluctuate unexpectedly.
As the last step in the purchasing process, the purchase order acts as a legally-binding document on both sides when the supplier confirms the order.
Here are the details that we need to take into account for issuing a Purchase Order:
In order for sellers to make financial forecasts and estimates in the long term, purchase orders should always be kept up to date, especially if we place recurring orders with the same supplier.
As Sales Orders and Purchase Orders are very closely related, we make the table below to help you better understand the difference between them.