A sales order (SO) is a formal record or document created by the seller after a customer places an order. It outlines what products or services were purchased, their quantities, prices, delivery terms, payment terms, and other conditions. It initiates the sales process and triggers downstream sales actions such as shipping, invoicing, and inventory updates.
A quotation is a proposal sent by the seller to the customer before they make the purchase. It states product or service prices, quantities, and terms, but are not binding. The quotation is part of the pre-sale process, and is meant for the customer's review and negotiation.
A sales order is created after the customer agrees to proceed with a purchase and confirms the terms finalized in the quotation. It often triggers the sales process.
A sales order is created before the product or service has been delivered. It is typically used internally to initiate packing, service, delivery, or production.
An invoice is sent to the customer after the goods or services have been delivered, or at the agreed billing stage. Its purpose is to request for payment, and it often includes information on amounts due, taxes, and billing deadlines.
Once a customer accepts a quotation, a sales order is created by the seller, while inventory is received or production is scheduled. Goods are then delivered (or service are performed) as agreed, then the seller issues an invoice based on the sales order and delivery. The customer then pays the seller and the order is closed. In some cases, a seller may also provide an official receipt to the customer after payment.
Many modern systems help automate sales order processes by automatically converting quotations to sales orders, reducing manual data entry errors. It pulls real-time inventory availability, trigger automated workflows such as producing delivery notes and invoices, and provides dashboards for order tracking and data analysis.
Integrating your sales management system with accounting, warehousing, and CRM modules can help improve overall business operations and efficiency.
