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What Is a Sales Order?

A sales order is a contract between a buyer and a seller.
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  • Written By: Diane Goettel
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 August 2014
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A sales order is a document that details the specific quantity of a product that a company or organization intends to purchase either for industrial use or resale. For example, a boutique owner purchasing dresses for a particular season might write sales orders with a number of clothing vendors who manufacture dresses that the owner feels will sell well in her store. A sales order is most certainly not a document that is only used in the world of fashion. Rather, it is an agreement to purchase goods that is used in many fields and industries.

One of the most important aspects to running a successful business is making sure that there is always a good quantity of product available for sale. A good quantity of product ideally meets the demands of a company's customers without there being overages or having the product expire or become obsolete before it has sold. Well-run companies often have dedicated teams who focus on sales histories, projected sales trends, and a number of other factors in order to be able to best complete sales orders. This means purchasing the right products and in the right quantities.

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It is common for companies to utilize an order management system by which each sales order can be tracked and analyzed after the purchased goods have been consumed, used, sold, or otherwise dispensed of. This kind of system can be especially important to companies that work with numerous vendors and place multiple orders over the course of a year or even over the course of a season. In fact, some companies hire staff to simply place orders and track them. These people are often referred to as purchasers.

The terms "purchase order" and "SO" are equivalent to "sales order." In fact, "SO" is simply an abbreviation of the term. The sales order constitutes a contract between a buyer and a seller. Once a company has issued a sales order, the company is committed to receiving and paying for the goods or services detailed within the sales order. This is especially important as the company supplying the goods or services may have to create the product exactly to the specifications of the purchasing company.

In summary, a sales order is a common and useful document used by many kinds of businesses throughout the world. These orders are used by small sole proprietors as well as large, multi-national companies. They function as an agreement between two parties, one purchasing goods or services and the other supplying those goods or services.

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Discuss this Article

StarJo
Post 2

I work at a clothing boutique in a college town where everyone dresses up for football games. We sell a lot more expensive dresses during football season than at other times of the year.

After a year of watching our sales closely, we figured out how to best handle our sales orders during different times of the year. Let's just say we write more sales orders for dresses from August through November than we write all year long.

wavy58
Post 1

My friend opened up a party supply store last year, and she has been in charge of doing her own sales orders. It was challenging at first, because she had to figure out through trial and error which items would sell best and which distributors offered the best deals.

She attended a trade show in Las Vegas a couple of months after opening, and she learned so much there. She came home with much more knowledge of how she should be handling her sales orders. She now has sales order software on her computer at work, and this has helped a lot.

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