Sales orders and invoices are two essential documents in the sales process. From confirming customer orders to requesting payments, both play crucial roles. A sales order allows customers to confirm their orders, while an invoice serves as a request for payment from the buyer. Together, sales orders and invoices contribute to the sales process by acting as official records, enabling efficient product sales and timely payment collection.
Although both are formal documents used for selling goods or services, they hold different meanings. Understanding the difference between sales order and invoice is important for running smooth business operations. Misusing them at different stages of the sales process can lead to delays or even disputes between the customer and the business.
To help you understand invoice vs sales order better, we have an in-depth guide to break down their key differences. Let’s begin!
What Is a Sales Order?
A sales order refers to a document that guarantees the customer’s order. It is usually made by a business owner to initiate the delivery of goods or services. Sales orders are generated only after the customer expresses the desire to purchase the produce and accepts the estimated delivery time. A sales order serves as a promise to deliver the ordered goods at the customer’s location.
Basically, this document helps businesses to save customer details and the number of goods they have requested to purchase. Later, when the goods are delivered and the amount is paid, businesses can refer to the sales order to generate an accurate receipt. In short, a sales order is just a normal form that customers fill in when confirming the order.
What Is an Invoice?
An invoice is a formal document used to notify the buyer that goods are delivered and it’s time to pay the outstanding amount. It is used to help the buyer know how much money they owe to you. An invoice can only be generated once the product is handed over to the customer.
This is because you can demand payment following the successful delivery of goods. If required, you can review a sales order to fill in the correct information when generating an invoice. Once an invoice is ready, hand over the original copy to the customer or you can even send it digitally using invoicing software.
Sales Order Vs Invoice
If you want to manage account payables more easily, you need to be more friendly with terms like sales orders and invoices. Here’s the difference between invoice and sales order to clear your doubts.
| Differences | Sales Orders | Invoices |
|---|---|---|
| Main Purpose | Generally, a sales order is issued to confirm the customer’s desire to buy certain goods or services as it is a detailed breakdown of what the customer wants to purchase. So, the purpose is to ensure that both the customer and business are clear on the order before delivery takes place. | An invoice is an official request for payment when the products or services have been delivered. Basically, it is sent by the business to remind the customer of their financial obligation and to get paid for the goods or services provided. |
| Time of Creating Document | A sales order is created right after the customer places an order i.e. before the product or service is delivered. It acts as a confirmation of the customer’s request and helps the business prepare for shipment. | An invoice is created only after the product or service has been delivered and the business hasn’t received the payment. It marks the completion of the transaction and serves as a demand for payment. It entails a due date by which the payment should be made. |
| Accounting Records | Sales orders are the ones that are never used for accounting purposes. Businesses can simply track what has been ordered and prepare for delivery. Therefore, sales orders do not impact the financial records or any payment records. | Invoices are crucial accounting documents that help businesses record the sale of goods or services. They play a vital role in financial management as well as tracking unpaid invoices. They help businesses in payment collections and improve cash flows. |
| Information included | Details included on a sales order will be:
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An invoice comprises below details:
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Conclusion
To sum it up, a sales order is a request form used by customers to confirm their order. On the contrary, an invoice serves as a payment request to clear the due amount. Now you know how these two terms, invoice, and sales order are different although they look similar. A sales order is used to initiate product delivery, while an invoice is made to officially request money from the buyer.
If they are part of your daily business activities, you can switch to Moon Invoice to reduce the time required to generate a sales order or an invoice. The sophisticated software provides ready-to-use templates to make beautiful invoices that attract payments 2x faster. Plus, Moon Invoice makes your invoice tracking process much easier, allowing you to boost the collection process and minimize the number of unpaid invoices. Want to try it by yourself? Avail your 7-day free trial now.
FAQs
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
