Sales Process

The Sales process navigates from selling the goods (and services) to delivering those goods to invoicing the customer for their purchases, to the last step in accounting of receiving the incoming payments. The Standard Documents that are involved with the Sales Process are: -                                                    SALES ORDER    à  DELIVERY    à  A/R INVOICE    à  INCOMING PAYMENTS.

 

Now lets us individually understand the workings of each document.

·       Sales Order: - The sales order is a commitment from a customer or lead to buy a product or service. The document serves as a foundation for planning production or purchase orders. Sales Order creates no Inventory or Financial posting in the system.

·       Delivery: - The Delivery is a legally binding document indicating that the shipment of goods or the delivery of services has occurred. When you create a delivery, the corresponding goods issue is also posted. The goods leave the warehouse and the relevant inventory changes are posted.   

·       A/R Invoice: - The invoice is a legally binding document. When an invoice is received, the posting is made to the related customer accounts in the accounting system. The A/R Invoice creates a financial posting which debits your customer and credits your sales revenue account, provided you’ve linked your delivery document to your A/R Invoice.

·       Incoming Payments: - Use this window to create a record each time your company receives a payment from a customer, vendor, or account. You can create an incoming payment to clear the debt of an open A/R invoice or an opening balance. You can also create an incoming payment for a down payment received before the goods or services were provided. An incoming payment document can be created for the following payment means: Cash, Check, Credit Card and Bank Transfer.

 

Other than the standard sales process, (mentioned above) there is another process called ‘Streamlined’ sales process. For our streamlined process, we will use just one document, the A/R Invoice, instead of going through the entire sales process. The A/R Invoice is the only mandatory document in the sales process. When an inventory item is sold on an A/R invoice that has no preceding documents, two additional postings are made: by a delivery document in a perpetual inventory system: a debit to the cost of goods sold account and a credit to the stock account. The streamlined sales process is predominantly used when your customer has an urgency in procuring the items or services that you sell and there is not enough time to go through the conventional sales process.