Understanding sales order processing

Traditional order processing methods gradually lose favor among businesses due to their inherent limitations and inefficiencies. These methods often involve manual data entry and paper-based documentation, making them prone to errors and delays.

Digital transformation and the rise of e-commerce have reshaped the business operations landscape. Companies have increasingly embraced online sales channels, global markets, and omnichannel strategies.

In other words, the emergence of digital systems gave birth to automated processes, such as sales order processing.

What is sales order processing?

Sales order processing represents an automated order processing journey. It involves a sequence of steps to ensure accuracy, efficiency, and customer satisfaction. 

Sales order processing isn’t solely about processing transactions. It’s also about delivering an experience that fulfills the customer’s expectations.

Sales order vs. Purchase order

While both sales and purchase orders are documents used in transactions, they serve different purposes.

The customer initiates a sales order to request goods or services from a seller, while the buyer generates a purchase order to request goods or services from a seller.

Sales order vs. Invoice

As mentioned, a sales order is prepared before the delivery of goods or services detailing what a customer wants to purchase.

In contrast, an invoice is generated after the goods or services have been delivered, serving as a request for payment from the seller to the buyer.

The invoice includes details of the items provided, their quantities, prices, and any applicable taxes or discounts.

How sales order processing works

Efficient sales order processing involves sequential steps that ensure smooth order fulfillment and customer satisfaction.

Order placement

Order placement marks the initial sales order processing stage. This step involves various channels, from direct interactions with sales representatives to online platforms or designated portals.

Customers communicate their requirements, initiating the process that sets the entire fulfillment mechanism in motion.

Order verification and entry

Upon receipt, the order undergoes meticulous verification to ensure its accuracy and completeness. This sales order processing stage detects any discrepancies, missing information, or potential errors that could impede the smooth flow of processing.

Verification guarantees that the order aligns with the customer’s expectations, reducing the likelihood of errors throughout the order fulfillment process.

Once verified, the order details are entered into the system, serving as the core reference point for subsequent processing stages.

Inventory checking

Following entry into the system, the next crucial step in sales order processing involves inventory checking to confirm the availability of the requested items.

This phase ensures the desired goods are in stock, allowing the process to move forward seamlessly.

In cases where certain items are unavailable, proactive measures such as backordering or notifying customers about potential delays are initiated.

This sales order processing stage establishes transparency with customers regarding the availability of their desired products.

Order confirmation

Following a successful inventory check, providing an order confirmation to the customer is the next stage of sales order processing.

This confirmation includes details such as order number, estimated delivery date, and other relevant information.

Picking and packing

Picking and packing set the stage for a positive customer experience.

Once an order is confirmed, the process moves to physically assembling the items. This sales order processing phase involves the following initiatives:

• Navigating the inventory
• Retrieving the correct products
• Packing the items 

Packaging is done with careful attention to prevent damage during shipping. Accuracy is paramount here, ensuring that what the customers ordered is exactly what they receive upon delivery.

Shipping and invoicing

With the order securely packed, it transitions to the shipping phase, where it’s handed over to the carrier for delivery. Simultaneously, an invoice detailing the shipped items, costs, taxes, and discounts is generated.

This sales order processing stage actualizes the customer’s purchase as the goods move from the seller’s possession to the customer’s hands.

The invoice is a formal transaction record crucial for financial reconciliation and customer reference.

Payment processing

Upon receiving the goods or services, the final sales order processing step in the transaction is the customer’s payment as per the invoice.

Payment processing involves verifying the chosen payment method, ensuring its validity, and reconciling it with the invoice details.

Accurate and swift payment processing is vital for maintaining healthy cash flow and proper financial records.

Delivery and confirmation

Delivery and confirmation mark the culmination of the sales order processing. Once the payment is verified, the goods are dispatched.

A delivery confirmation is then sent to the customer, affirming their order’s successful receipt or completion.

Post-sales support

Post-sales support is a crucial continuation of the customer journey post-delivery. It extends beyond the transactional phase, encompassing activities to maintain customer satisfaction and loyalty.

This stage involves handling returns and addressing any queries or concerns the customer might have post-purchase.

By offering effective post-sales support, businesses demonstrate their commitment to their customers’ well-being and showcase their dedication to resolving product issues.

How to outsource sales order processing

Many trusted outsourcing companies like Outsource Accelerator can offer related services and handle various aspects, from order entry to customer support.

Outsourcing sales order processing can be an efficient strategy for businesses looking to streamline operations, reduce costs, and focus on core competencies.