Definition
A sales order is a document the seller creates to confirm a customer's order, listing the products or services, quantities, prices, and delivery terms the seller has agreed to supply. It is the seller's internal record that the order was accepted and is used to schedule fulfillment before an invoice is issued.
Also called: SO, Order confirmation
Sales order in practice
A purchase order and a sales order describe the same deal from opposite sides. The buyer issues the purchase order to place the order; the seller issues the sales order to accept it, often quoting the buyer's PO number.
Sales orders drive the work that happens before billing: reserving stock, scheduling production or staff, and arranging shipment. Once the order is fulfilled, the seller converts it into an invoice for what was actually delivered.
Because no goods or services have changed hands yet, a sales order is not recorded as revenue or as a receivable.
Example
A print shop receives PO 4471 for 2,000 brochures. It sends sales order SO-0915 confirming the price and a June 12 delivery, then invoices the client after the brochures ship.
Frequently Asked Questions
Is a sales order legally binding?
Once the seller accepts the buyer's order and both agree on the terms, there is usually a binding contract. The sales order is the seller's written record of that acceptance.
Do I need sales orders if I already send quotes?
Not always. Small service businesses often go straight from an accepted quote to an invoice. Sales orders matter more when you manage inventory or fulfill orders in stages.
Related terms
- Purchase order A purchase order is a document a buyer sends to a supplier to formally request goods or services at agreed prices, quantities, and delivery dates.
- Quote A quote is a document that offers a client a fixed price for specific goods or services before work begins.
- Invoice An invoice is a document a seller sends to a buyer to request payment for goods or services that have been delivered.
- Packing slip A packing slip is a document included in a shipment that lists the items and quantities inside the package.
- PO number A PO number is the unique identifier on a purchase order that a buyer issues before a sale.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.