The purchase order is a written commercial document issued by the buyer to the seller, comprising of containing types, prices, quantity, quality and terms of the goods to be delivered. On the other hand, the sales order is a confirmation document prepared by the seller and sent to customers before the delivery of specified goods, at the customer’s place.
Both purchase order and sales order become binding, when the party to whom it is issued, accepts it. While purchase order authorizes the sale of products, sales order confirms the sale of goods. Practically, the two documents are widely used by the manufacturers, wholesalers, suppliers and retailers, all around the world. Check out this article, it presents you all the important differences 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
The purchase order can be understood as a written request, made to a particular supplier, to provide goods of specified quality, quantity, at the price, terms, and condition so agreed. It is a commercial document, which binds the purchaser to take the delivery of the goods contained in the document, if the terms so mentioned are satisfied.
It contains details like order number, date, name of supplier and address, material code, material description, the quantity of material, price, place of delivery, terms of payment etc.
Definition of Sales Order
Sales order can be described as a written commercial document, which confirms the sale of specified goods. It is prepared by the seller and sent to the customers, contains the details of merchandise of particular type, quantity, quality, at the price, terms and consitions agreed upon. When the customer accepts the document, the seller is cound to deliver the said goods, at the stipulated date and price.
Details may be related to order number, date of delivery, name and address of customer, material code, material description, price, taxes, place of delivery, terms of payment and so forth.
Key Differences Between Purchase Order and Sales Order
The points given below are substantial so far as the difference between purchase order and sales order is concerned:
- 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.