For most businesses, a key step in the sales process is the sales order. Knowing how to create and manage sales orders in NetSuite will help you make informed decisions that impact the efficiency of your entire sales department.
Sales Order Overview
Before jumping into the details of how sales orders in NetSuite work, we need to have a high-level view of sales orders, including what they are in the first place and what exactly they do.
Definition
According to SuiteAnswers, a sales order is simply “a transaction that records a commitment to sell items or services to a customer.” It’s your business’s way of telling a customer, “We’re going to sell this product/service to you.” Because the sales order just represents a commitment to sell something (instead of actually selling something), it does not impact the general ledger. All the financial information—how much the item/service costs, how much shipping costs, etc.—is represented on the sales order, but since the sales order isn’t a bill, you won’t find it anywhere in your accounts receivable.
Purpose
So, what does a sales order do? What’s the point of making a formal commitment to sell something? A sales order tells you what has been ordered, which, in turn, tells you what should be available in your inventory. If a customer puts in an order for something that isn’t currently in your inventory, then you know to get that item for them. A sales order also shows you the shipping status of items when there are multiple items on a single order. As a result, you can easily keep track of which items have already shipped (and, consequently, been billed) and which items have yet to be shipped (and, consequently, still need to be billed).
Creating a Sales Order
Now that we better understand what sales orders are, let’s take a look at creating a sales order in NetSuite.
Ways to Create a Sales Order
There are two ways to create a sales order in NetSuite. First, you can create a sales order from an estimate. If your company has a practice of creating estimates for potential sales, then this method is the one you would want to use. You would start by going to the list of existing estimates, which you can find by navigating to Transactions > Sales > Prepare Estimates > Lists. On this page, choose the estimate you want to convert into a sales order. At the top of the estimate page, select the Sales Order button to convert the estimate. This method saves time since all the work of putting in information has already been done. With one click, all the information in the estimate automatically transfers to a corresponding sales order.
The second way you can create a sales order is to create it from scratch. To do this, navigate to Transactions > Sales > Enter Sales Orders. If you go this route, then you will need to put in all the relevant information on the sales order form.
Types of Sales Order Forms
There are four types of sales order forms: Standard Sales Order; Standard Sales Order – Cash Sale; Standard Sales Order – Invoice; and Standard Sales Order – Progress Billing. Once you have navigated to the new sales order page, you would choose which of these types you want to use in the Custom Form dropdown list. If you have customized the appearance of the standard sales order form, then that custom form would appear in this dropdown list too.
The standard sales order form is by far the most flexible of the four types. With it, you can do what any of the other types can do. The only reason why you might wish to use the more specific sales order forms is that they don’t give you superfluous options. For example, if you choose the Standard Sales Order – Cash Sale form because you already know that you are creating a sales order that will be billed as a cash sale, then none of the invoice-related options would appear on the form.
The Standard Sales Order Form
To better understand each of the sales order forms, though, it’s important to have a grasp on how the standard sales order form works. When you create a sales order, you must include the following four pieces of information: the customer; the date of the transaction (NetSuite will default to the current date); the status of the sales order (Pending Approval or Pending Fulfillment); and the item(s) that you are committing to sell. The other fields are all optional—though chances are you would still need to use some of them.
A couple of those technically non-essential fields that you would probably still use are Payment Terms and Payment Method. What you do with these fields on the standard sales order form determines whether NetSuite creates either a cash sale or an invoice when the sale is billed. When you enter a payment method on the standard sales order form, NetSuite automatically creates a cash sale when the sale is billed. And when you enter payment terms, NetSuite automatically creates an invoice when the sale is billed. If you don’t enter information for either of these fields, then NetSuite will create an invoice when the sale is billed.
Cash Sales and Invoices
We’ve brought up cash sales and invoices a couple times already—what is the difference between the two? A cash sale means that you received payment for the items or services at the time of delivery, while an invoice means that the payment has been delayed. You can create cash sales or invoices either from a single sales order or from multiple sales orders. To create a cash sale or invoice from a single sales order, navigate to Transactions > Order Management > Fulfill Orders. On this page, select the customer whose sales order you want to create a cash sale or invoice for. Then, choose the location from which the sales order will be fulfilled under the dropdown field Bulk Fulfill From Location. Under the Order subtab, check Fulfill next to the sales order you want to convert to a cash sale or invoice, and then click Save.
To create a cash sale or invoice from multiple sales orders, you would follow the same steps that you use for single sales orders. The only differences are that instead of choosing a single customer, you would select All in the Customer field. And instead of checking Fulfill next to just one sales order, you would select it next to all the sales orders you wish to convert. Note that you don’t determine, on this page, whether or not the sales order will fulfill as a cash sale or an invoice. Rather, NetSuite draws that information from each individual sales order.
Conclusion
Understanding how sales orders in NetSuite work strengthens your grasp of the entire NetSuite sales process.
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