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Re: Sales Invoice vs. Sales Order

On 09/21/2012 09:04 AM, Michael Richardson wrote:

"Brian" == Brian Wolf <..hidden..> writes:

     Brian>    Not knowing much about accounting, can someone explain the
     Brian> difference between a Sales Invoice and a Sales Order in
     Brian> LedgerSMB ?

Not being an accountant either...

A sales order is what I write down when you want to buy something from
me.  You ask me to ship you 10,000 staples next week.
When I actually *do* ship you the 10,000 stables, I generate an invoice
to go with it.  Before I ship, I have no receivable asset, but I have
10,000 stables.  After I ship, I have a receivable asset posted, but I
don't have the 10,000 staples.

If this happens between 10am and 2pm, not a huge difference.
If it happens between noon on Dec. 31 and I ship on Jan 4, the next
year, this might matter.

Unless I post the order, my factory floor might not actually produce the
10,000 staples, or they shipping department might ship the last 10,000
staples to someone else.


All true, but to make this simpler:

A sales invoice hits the books, and represents a financial transaction.
A sales order does not show up in the books. It's upstream of any financial transaction, and so anything on it will not be reflected in any financial report or have any transactions on any of the account charts.
So orders are more for managing your workflow. Invoices are for accounting. Your accountants probably do not care about your orders -- all they care about are invoices. Like Michael said, though, your factory floor should care about orders. 

Cheers,
John Locke
http://www.freelock.com