Inventory management includes the responsibility of handling stock finances and along with that comes confusing financial terminology. ASAP Systems, the leader in Inventory System and Asset Tracking solutions based in San Jose, California, is here to help you distinguish between the most commonly used terms when dealing with commerce. We will be walking you through the difference between Purchase Order, Sales Order, and Invoice, three of the most commonly mistaken expressions.
Our purpose is to define the difference between Purchase Order, Sales Order, and an Invoice so they are not used interchangeably.
A Purchase Order, or PO, is a written document which goes through an approval process and is then sent to a vendor with the intent to make a purchase. Typically, the PO includes a Purchase Order number, the name and address of the supplier, name or code of the product purchased, quantity, price, delivery terms, and any additional conditions for the transaction. If the PO is accepted by the vendor, it becomes a binding contract between him/her and the customer. POs are presented either in paper or electronically, but electronically automated Purchase Orders are much more reliable.
Unlike the PO, the Sales Order, or SO, is issued to the customer by the supplier or vendor. It is a document that confirms the sale of the products ordered, and details the nature of the sale, such as the type of items sold, amount, price including the taxes and delivery fees if any, the Purchase Order it refers to, and any other relevant information to the sale. Just as in the case of the PO, Sales Orders can be created digitally or on paper.
An invoice is a legally document which the vendor sends to the customer requesting payment for the goods sold. It details the products sold or services provided by the vendor, along with a statement of the sum due. This document functions as a written confirmation of the exchange made between the buyer and the supplier. The invoice typically includes an invoice number, the date of creation, the date it was sent, the date the products were sent, names of both the buyer and the seller, addresses, details of the supplies purchased, the total amount due (including taxes, if applicable), and the terms of payment.
The terms of payment vary depending on the supplier, but the purpose remains the same. A vendor may place a deadline for the customer to pay, offer discounts, include a penalty fee for late payment, and state the method of payment agreed upon. Invoices are important to have as they can be used legally in case a payment is overdue or missing. Invoices can be presented either in writing or electronically; however, electronic invoices are more definitive.
In conclusion, each term identifies a specific document: The Purchase Order specifies what the customer expects from the supplier, the Sales Order confirms the sale, and an Invoice requests payment for the order.
With ASAP Systems’ Inventory System and Asset Tracking Solution, managing your paperwork has never been easier. Our highly configurable and fully automated system provides you with the freedom and flexibility to set up your Order Management System to suit your every need.
What ASAP Systems Offers:
Many companies choose to refrain from digitizing their documents, but this may cause problems. Here are some of the benefits that ASAP Systems offers your organization:
Increased Productivity: Switching from manual to digital order processing will increase productivity as it decreases the time needed to enter manually.
Less Errors: Avoid the possibility of incorrect data entry and calculations and keep all your information accurate.
Control: Our Order Management System offers Approval Cycles for both Purchase Orders and Sales Orders. These cycles give you much more control over requests. None will go through without your supervision and without your approval.
Centralized Documents: Our system keeps all the information and details organized in one place and accessible.
More Accessibility: ASAP Systems’ cloud-based online solution gives you immediate access to everything at any time and at any location.
Simple Creation and Sharing: Automatic creation of these documents makes the writing process much easier. You can also simply email document.
Order Status Tracking: View order and payment status to stay up-to-date with the progression of the process.
Referential Documentation: Oftentimes the conditions of orders are not met by either party. Without documentation, customers and vendors do not have tangible evidence of the transaction to refer so that errors are fixed.
Safe Record-keeping: Keeping your records on paper jeopardizes their safety. You risk information getting lost, damaged, or being unintentionally misinterpreted. Digitizing your documents helps you avoid these situations.
Less Chance of Fraud: Automated paperwork will help your company avoid falling victim to fraudulent activities since everything is automatically documented within the system.
With ASAP Systems, you manage your orders with complete control. From email notifications of pending requests to the power to accept or reject them, you have the ability to build an OMS System that keeps your records safe and improves your company’s efficiency. We will help you reach optimal Inventory and Order management.