Business

4 Types of Sales Orders You Should Know

Definition

A sales order is defined as an internal document that is generated by the organization to confirm a purchase. It is initiated after a customer communicates his or her intention to buy a product or service. Apart from explaining the sale, the staff can obtain information about the customer.

The customer information acquired is added to the database so that all needs can be addressed during processing of the order.

There are two reasons that make a sales order important.

  • It shows exactly what the customer intends to buy. This record proves invaluable to the sales staff because it can be later reviewed and additional information added e.g. comparison between quantity of desired product and quantity of product delivered to the customer.
  • Apart from explaining in detail the need of the customer, a sales order provides valuable information to the operational staff. It helps them prepare the delivery. In order to fully process the products, the staff needs the sales order.

Types of sales orders

Some of the standard order types that are common in businesses are explained below:

  • Cash sales – For this type of order, the prospect places an order, picks it up and pays for it. After the order is entered, delivery is executed immediately because payment is done in cash.
  • Rush order – the customer needs are met on the same day the order is placed. It should be completed in less than normal lead time.
  • Scheduling agreement – this is an order type that indicates the details of quantity of goods and their delivery dates. It is an external agreement where the information is indicated as schedule lines. Processing of scheduling agreement is done the same way as a normal delivery.
  • Third-party order – In this case, delivery is not done directly to the customer but through a third-party vendor who then delivers the product to the intended customer.
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After a customer makes an order, they hold the business responsible for every time wasted until that order reaches them. In case the organization takes long to deliver the ordered items, the customer may defect with a bad experience. To avoid this, businesses have initiated sales order tracking for customers to communicate with the providers every step of the way.

Sales order tracking makes it easier for customers to follow their orders through the fulfillment process. If their order encounters problems during fulfillment, then they have an obligation to know its status.

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