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Difference between a Purchase Order and a Sales Order

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People often get confuse between the terms purchase and sales order though they are significantly different. If you’re a business owner, a mix-up of these financial terms cannot be an option; therefore, lets find out the major differences between the two:

The purchase order or PO is basically an official document sent by the purchaser to the supplier, covering the name, type, quality, quantity, terms and price of the product or service to be delivered. Conversely, the sales order or SO is a validation document arranged by the supplier and issued to the customer prior to the delivery of the particular product or service to him.

Major Differences between PO and SO:

Purchase Order (PO) Sales Order (SO)
1. A PO is an official document prepared for ordering products or services. 1. A SO is an official document prepared for the authorization of sale.
2. A PO is issued to the supplier by the purchaser. 2. A SO is issued to the purchaser by the supplier prior to the delivery of product/service.
3. A PO becomes a binding contract once it gets approved. 3. An approved SO only accepts the sales and does not become a binding contract.
4. The purchaser prepares the PO and sends it to the product/service supplier. 4. A SO is issued to the purchaser by the supplier.
5. A PO comprises of the following:

  • Name of product/service
  • Type of product/service
  • Quality of product/service
  • Quantity of product/service
  • Price of product/service
  • Added sale terms
  • PO number
  • Payment period
  • Delivery time
5. A SO comprises of the following:

  • Name of product/service
  • Quantity of product/service
  • Price of product/service
  • Additional Sales term
  • PO number
  • Delivery plan
  • Payment time

 

In point of fact, purchase and sales orders are pretty much interrelated given that when the purchaser issues a PO to its seller, he agrees to take the offer after settling for the contractual terms and then delivers SO to the purchaser for the validation of sale. As soon as the sale is accepted, the product/service is delivered to the purchaser. Thus, every rupee you put in your business has the possibility to generate a long-term worth for your business. Automize your business financials and switch to an automated bookkeeping system like LedgerMax to get on to the new heights of efficiency and productivity.

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