The two terms ‘purchase’ and ‘sales’ are not new to us; we clearly understand it because we deal with these two terms daily, but what we don’t know is about purchase order and sales order which is quite difficult. Come and let’s understand the meaning and the difference between Purchase Order and Sales Order.
Content: Purchase Order Vs Sales Order
|Basis for Comparison||Purchase Order||Sales Order|
|Meaning||Purchase order is a document used for ordering goods.||Sales order is a document used for confirmation of sale.|
|Details||Prepared by the buyer and is sent to the supplier.||Issued by the supplier to its buyer before delivery.|
|Effect of acceptance||Creates a contract between the buyer and supplier.||It approves the sale.|
Definition of Purchase Order
A written commercial document prepared by the buyer containing types, prices, quantities and terms of the goods to be bought or sold and the services to be rendered sent to the seller, known as a Purchase Order (PO). When the seller accepts the terms offered by the buyer and agrees at a certain point, it becomes a binding contract between both the parties.
Definition of Sales Order
A written commercial document issued by the seller to its customers, containing the details of merchandise and services to be rendered before the actual delivery, is known as a Sales Order (SO). In other words, it is a document which is issued before the actual delivery, to get the buyer’s approval of sales and consist of various details like date, time, and mode of delivery, etc.
Key Differences Between Purchase Order and Sales Order
- When Purchase Order is accepted, it becomes a binding contract between a buyer and seller. On the other hand, when the sales order is accepted, it approves the sale.
- With the help of PO, the buyer can place an order for goods and services while with the help of sales order; the buyer can know the date, time, and mode of delivery of goods and services.
- Purchase Order is prepared by the buyer and is sent to the supplier of goods and services, whereas the supplier issues the Sales Order to the buyer.
- Contains details for merchandise and services.
- Written commercial document.
Purchase Order and Sales Order are closely interconnected because when the buyer sends PO to its supplier, he accepts the proposal after agreeing to the terms and conditions and then sends SO to the buyer for the confirmation of sale. Once the sale is approved, the goods and services are finally delivered to the buyer.