While the sales process can be long and complex, sales order processing is concluded with a sales order. A sales order is an internal document that contains all of the information about a sale or other transaction between a customer and a company. The information in the sales order can include the customer’s name, shipping address, transaction date, products ordered, descriptions, units of measure, quantities, prices, sales tax, etc. A sales order is more detailed than a sales invoice. Some miscellaneous info provided in the sales order form could include shipping address, accounts receivable, order entry, order status, payment terms, sales order number, and delivery date. It is created by a company when a sale comes in from a customer, and it summarizes all of the data that was received and that is necessary to complete the fulfillment of the order. It can also be created independently of an incoming customer order.
Sales orders can be used for three main purposes:
- Customer Sale
- Drop Ship
- Credit Return
As you can see, sales orders are not always used for sales, but they can also be used for product returns. We will go into greater detail on each type of sales order and how they help with warehouse management and order fulfillment.
This is the simplest type of sales order. If you are using inventory management software, when you create a new sales order, the software will automatically populate the order number, fulfillment date, and other information available to it. You can manually change this information, as well as a great deal more in this commercial document. You can modify the customer’s name, the physical address that you will send the bill to, and the physical address the package will be mailed to. The billing and mail addresses are not always the same, so it is helpful to have the option to list two different ones when necessary. After you have done that, you can add and check the inventory items and quantities on the sales order, and you will be able to see the after-tax total at the bottom.
Once all of the necessary information is added to the sale order, you can issue it and begin the process of fulfilling it. This involves picking, packing, and shipping the right items to the customer’s address that is on the sales order.
Drop shipping involves obtaining products from another vendor or wholesaler and sending them to your customers. You do not actually keep the products in your warehouse under this arrangement. The need for drop shipping can arise because you have temporarily run out of a certain item or it can come from the fact that you have a business model in which you save money by not storing inventory in your own warehouse, but you instead having it stocked in other companies’ warehouses.
Whatever the case may be, follow the same steps above to create a sales order. But instead of picking, packing, and shipping the items on the sales order from your warehouse, you will need to create a purchase order for all of the items that you do not have in stock. Issue that purchase order and either have the items sent directly to your customers or have them sent to your location so that you can receive them, check that they are correct, and then send them on to your customers.
Credit returns are an important part of doing business because sometimes customers received damaged goods or they do not receive the products they ordered or they may even get the wrong quantity. There are myriad reasons to issue a credit return sales order.
This is essentially the reverse of the sales order process for a typical sale to a customer. Open a previous sales order process or create a new one and then add the products that a customer wants to return to you. After you issue the sales order, you can receive the returned items into your warehouse. If they are undamaged and/or unopened, you can add them back to your usable inventory on the shelves of your warehouse. If they are no longer sellable, you can either attempt to repair them or scrap them.
A company can use either or all of the three types of sales orders (depending on the nature of the business). One of the advantages of keeping the sales document is to serve as a point of reference for any sales staff at any stage in the sales order management.
SALES ORDERS AND INVENTORY SOFTWARE
All in all, a sales order can be used by a small business or a conglomerate. Fishbowl Manufacturing and Fishbowl Warehouse allow you to create and use all three of these sales order types. And that is just one small part of what they can offer your business as you work to manage your inventory in a single location or in multiple locations.
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Sales orders are documents that list all pertinent information of an order made by a buyer to a seller. There are three primary uses for a sales order:
- Customer sale
- Drop ship
- Credit return