In this article, we will explore the main differences between an invoice and a sales order. Read on to learn more.
A sales order is a document created by a seller to confirm the details of a customer's purchase, like the products, quantities, and prices. It helps both parties stay on the same page and track the order process.
Example: A customer orders a PlayStation 5 and two DualSense controllers from an electronics store, and the store generates a sales order listing the items, quantities, and total price. This document ensures both the store and customer agree on what’s being purchased.
Here are some of the distinct qualities of a sales order:
A sales order is issued to confirm the details of a customer's purchase, including items, quantities, and prices. It ensures both parties agree on the terms before fulfillment.
Sales orders act as a guide for the business to process and complete the customer's request. It helps coordinate inventory, production, or service delivery.
By specifying exact details, sales orders minimize misunderstandings and mistakes in fulfilling the customer's request. This ensures accuracy in delivering the right products or services.
Sales orders provide a unique reference for tracking the progress of an order. Both businesses and customers can use it to monitor the status from processing to delivery.
Sales orders often serve as the foundation for creating an invoice after fulfillment. This ensures consistency in details between the order and the billing process.
An invoice is a document sent by a seller to request payment from a customer for goods or services provided. It lists the items, quantities, prices, and payment terms, serving as a formal billing statement.
Example: A graphic design agency receives an invoice for 10 Adobe Creative Cloud licenses at $55 each, totaling $550. The invoice includes payment instructions and is due within 30 days.
Here are some of the distinct qualities of an invoice:
An invoice order is a formal document sent to the customer to request payment for goods or services already provided. It includes payment terms and instructions to facilitate timely collection.
Invoice orders act as official records for both the seller and buyer, detailing the transaction's financial specifics. They are essential for bookkeeping and tax reporting.
Invoices include precise information about the total amount due, payment methods, and deadlines. This helps avoid confusion and ensures smooth payment processing.
Businesses use invoices to track outstanding payments and plan their finances effectively. It helps them maintain steady cash flow and manage accounts receivable.
Invoice orders serve as proof of a financial agreement between the seller and buyer. In case of disputes, they act as legal evidence to resolve issues.
A sales order and an invoice may seem similar but they serve different purposes . We will explore these differences below.
We hope that you now have a better understanding of the difference between a sales order and an invoice. If you enjoyed this article, you might also like our article on manual invoice or our article on statement vs. invoice.