Purchase Order vs Sales Order: Difference and Comparison

It’s not difficult to perceive any reason why individuals may confound the two business records, Purchase Order and Sales Order.

Each contains explicit, itemized data about orders for labour and products. The two records are connected inside the buying system. By all accounts, they might give off an impression of being comparative.

After looking into it further, you’ll note some key contrasts.

Key Takeaways

  1. A purchase order is a document issued by a buyer to a seller requesting specific products or services. In contrast, a sales order is a confirmation from the seller that they will provide the requested items.
  2. Purchase orders initiate the buying process, whereas sales orders are generated after the seller accepts the purchase order.
  3. Both documents help track transactions, manage inventory, and maintain accurate financial records for businesses.

Purchase Order vs Sales Order

A purchase order is an official document that a buyer issues to a seller that indicates information on the desired product or service. It approves a deal to offer products in the specified quantity. A sales order is a marketable document that is issued by the seller to the buyer to confirm the placement of an order for goods or services. 

Purchase Order vs Sales Order

Business Quiz

Test your knowledge about topics related to business

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Productivity means how much was done compared to what it took to do it.

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Which country's currency is called the Baht?

3 / 10

Importing goods for the purpose of re-export is termed as ___________.

4 / 10

Wages and taxes that a company pays are examples of:

5 / 10

What is revenue?

6 / 10

The Standard of living is the number of goods and services people can buy with the money they have.

7 / 10

When an existing company offers its shares for sale to the existing shareholders, it is known as ___________.

8 / 10

Whose Liability is limited to the extent of his capital to the firm?

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Shares traded through stock exchanges are called __________.

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In order to gain a competitive edge on the competition, some companies focus on:

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A purchase order (PO) is a record shipped off a provider when you or somebody in your organization buys something. This could be intended for writing material, office furniture, or even stock.

In any case, before a PO is shipped off a provider, a buy demand must be endorsed by an approved individual. 

A sales order (SO) is given to the purchaser by a provider or specialist organization. Much of the time, it is given whenever an instalment is received from the purchaser.

In some cases, a sales order can likewise be given for products purchased using a credit card.

Comparison Table

Parameters of ComparisonPurchase OrderSales Order
MeaningPurchase Order is a composed business record that approves a provider to supply the expressed materials, at the concurred agreements. Sales Order is an affirmation record that is given to the purchaser by the vendor, preceding the conveyance of the predetermined labor and products.
Who plans it?Prepared by the purchaser and is shipped off the supplier.Issued by the provider to its purchaser before conveyance.
SignifiesIntention to buy certain labor and products from the seller.Agreement to offer certain labor and products to the purchaser. 
GenerationOn the acknowledgment of the merchant’s deal, citation, or proposal.On getting the buy request. 
ObjectiveTo approve the sale.To confirm the sale.

What is Purchase Order?

The purchase order is a business archive addressing a lawfully authoritative arrangement for the buyer to take the conveyance of the products as requested if the provisions of the understanding are met.

The buyer is then expected to meet the instalment terms illustrated in the purchase order. 

Independent ventures will depend on more direct buying exchanges, while huge organizations haggle huge scope contracts with confided-in providers.

Purchasing orders offer them the chance to secure terms and other appropriate particulars throughout some undefined time frame, which takes out the need to reevaluate contract subtleties for each buy and protects the organization against fluctuating business sector value impacts. 

The provider, thus, gets what’s in store over the long haul, permitting them to exploit economic situations to purchase crude materials when costs are least and timetable labourers for the most extreme efficiency, rather than compensating double-time to deliver one-off orders with a short turnaround.

At the point when the provider sends a receipt referring to the purchase order, he realizes when to expect an instalment and how the instalment will be conveyed.

Since the receipt terms are now supported and things are normal, the instalment can be worked with immediately.

purchase order

What is Sales Order?

Sales order alludes to the composed report where the offer of specific products is affirmed. It is the dealer who readies the sales order and dispatches it to the client.

The sales order incorporates the subtleties of the data needed for conveying products to the clients.

These incorporate the name and address of the beneficiary, request number, conveyance date, depiction of material (for example, the sort, quality, amount, and cost of products being shipped off the clients), instalment plan, and different agreements settled on the two gatherings. 

Sales orders are restricting records imperative to production network the board frameworks.

At the point when a purchaser sends a buy request, the dealer is liable for satisfying the request, which can be convoluted when managing a huge organization.

Merchandise might require diverse conveyance dates, various areas, or other detail intricacies. The business request removes relevant subtleties for single requests from the PO and guarantees that orders are accurately filled.

Sales orders are fundamental for staying up with the latest and on schedule. 

When the sales order is satisfied, the bookkeeping office utilizes the data it contains to produce a receipt for the shipment, which is then shipped off to the purchaser.

Sales order gives data identifying the stock, in regards to the items in stock, and the number of items there in the raincheck.

It works with the buying branch of the association to estimate all the more normally while buying from the providers.

sales order

Main Differences Between Purchase Order and Sales Order

  1. A purchase order is the expectation of the client to buy certain labour and products from the merchant, and a Sales Order demonstrates consent to offer certain labour and products to the purchaser. 
  2. A purchase order is created when the purchaser acknowledges the deal, proposition, or citation of the merchant. Oppositely, a Sales Order is created against the buy request. 
  3. A purchase order targets approving the deal, though a Sales Order is utilized to affirm the particulars of the exchange. 
  4. When a purchase order is acknowledged by the dealer, it makes an official agreement between the purchaser and vendor. Conversely, when the Sales Order is acknowledged by the purchaser, it implies that the purchaser has consented to the particulars of the exchange. 
  5. A purchase order is an outer record that is utilized to make a solicitation to the vendor to give products of indicated quality and amount. A Sales Order is an inner report that can be shipped off the client on solicitation or it tends to be utilized for inward use to pass on data to the staff.
Difference Between Purchase Order and Sales Order
  1. https://www.emerald.com/insight/content/doi/10.1108/IJOPM-06-2020-0377/full/html
  2. https://aaltodoc.aalto.fi/handle/123456789/390

Last Updated : 05 September, 2023

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