What is Sales Order Processing?

Posted by: Patricia Barlow Post Date: 22nd May 2015

In any business, it is important to be organised and follow processes to ensure the effective smooth running of the business. One process that must be adhered to concerns the ordering of goods or services by customers, ensuring everyone who needs to be involved is aware of the order, and that the customer is invoiced on time. This is called sales order processing. Let’s take a look at the process in more detail.

Customer order

What is sales order processing?

The first part of the process involves the customer ordering the goods. This may be a phone call, an email, or a purchase order maybe received. This tells us what the customer wants to order, and how much they have been quoted. It may also tell us information about where the goods are to be delivered, or where the service is to be carried out.

Sales order

This confirmed order will then be raised into a sales order, an internal document that the customer does not need to see, but will enable the operations and finance teams to ensure a high quality service. This is an important step, as without a sales order if the order, there would be no paperwork for what the customer requires, the quantities they require, and the pricing. This means no auditable trail.

Production

The sales order that is raised by the sales team will then be sent to the production team to either produce the goods, the warehouse team to pick the goods, or the operations team to carry out the service. The sales order gives these teams enough information for them to carry out their tasks without having to complete lots of paperwork.

Once the goods have been completed and delivered, a delivery note will be sent to the customer. This will also need to be sent to the finance team who, using the sales order and the delivery note, will be able to produce a sales invoice to ensure the goods or service are paid for.

The smooth running of this process will ensure orders are received, completed and invoiced on time, allowing a smooth and efficient process. Sales order processing is covered in more depth during the AAT accounting qualification. To find out more, get in touch below.

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