Evrenus Fırat Polat · ·
When a business buys from another business, the same transaction can generate two different documents, one from each side. They are easy to mix up because they often cover nearly identical information.
Purchase order: the buyer's document
A purchase order is issued by the buyer, confirming what they are ordering and authorizing the purchase on their own end. It is their internal commitment, sent to the seller as notice of an approved order.
Sales order: the seller's document
A sales order is issued by the seller, in response to a purchase order (or any confirmed order). It internally confirms that the order has been received and accepted, and will be fulfilled. It is your side's record that the sale is happening, used to trigger fulfillment, scheduling, or production. Sometimes it is also sent to the buyer as an order confirmation, which can state delivery dates, stock availability, and any changes.
Side-by-side
| Purchase order | Sales order | |
|---|---|---|
| Issued by | Buyer | Seller |
| Purpose | Authorize a purchase | Confirm and schedule a sale |
| Triggers | Buyer's approval and budget | Seller's picking, production, or booking |
| References | Buyer's PO number | Sales order number plus buyer's PO number |
| Sent to | Seller | Internal team, often also the buyer |
Why a business might issue both
For larger or repeat B2B transactions, it is common for both documents to exist for the same deal. The buyer's purchase order authorizes their spend, and the seller's sales order confirms acceptance and kicks off fulfillment on the seller's side. They typically reference each other, with the sales order citing the buyer's PO number, so both companies' internal systems can match them to the same transaction.
Worked example: from PO to invoice
A restaurant buys supplies from a wholesaler.
Purchase order (restaurant), PO-1450:
- 50 kg flour at $1.20 = $60.00
- 20 L olive oil at $9.50 = $190.00
- 10 boxes tomatoes at $14.00 = $140.00
- Total: $390.00
Sales order (wholesaler), SO-7731, referencing PO-1450: The wholesaler checks stock and finds only 8 boxes of tomatoes available. The sales order shows:
- 50 kg flour: $60.00
- 20 L olive oil: $190.00
- 8 boxes tomatoes at $14.00: $112.00 (2 boxes backordered)
- Confirmed total: $362.00
The wholesaler sends the sales order as a confirmation. The restaurant sees the difference of $390.00 − $362.00 = $28.00 and agrees to take the other 2 boxes next week.
Delivery: goods leave with a packing slip or delivery note listing quantities.
Invoice: the wholesaler bills $362.00 citing SO-7731 and PO-1450. The second delivery is invoiced as $28.00. Any tax or VAT is added according to local rules, so check with your accountant.
Without the sales order step, the restaurant might have expected $390.00 of goods and questioned a $362.00 invoice.
When you only need one
Plenty of transactions do not need this level of formality on both sides. If you are the seller and the client does not issue formal purchase orders, a sales order (or simply the accepted quote) can serve as your own internal confirmation that an order is happening, without a corresponding PO from the buyer's side. Likewise, if you are a buyer and the supplier does not issue sales orders, your PO and their invoice may be enough.
Step-by-step: handling an order as the seller
- Receive the buyer's PO or accepted quote.
- Check items, prices, and delivery date against what you offered.
- Check stock or capacity.
- Create the sales order, citing the buyer's PO number.
- Send confirmation to the buyer, noting any changes.
- Fulfill the order and send the packing slip or delivery note.
- Invoice, citing both numbers. Use the invoice generator.
- Match the payment when it arrives. See payment reconciliation.
Where the invoice fits in
Neither document is a request for payment. That is still the invoice's job, issued once the order is fulfilled, ideally referencing both the sales order and the buyer's PO number if one exists. Our sales order generator and purchase order generator cover each side. For the buyer-versus-invoice distinction, see purchase order vs. invoice.
Common mistakes
- Not citing the PO number. Matching on the buyer's side becomes manual and slow.
- Silent changes. If you cannot supply something, say so on the sales order.
- Mixing numbering. Keep sales orders, quotes, and invoices in separate sequences. See invoice numbering.
- Treating the sales order as a bill. It is a confirmation, not a payment request.
- Not updating after changes. Issue a revised sales order when quantities or dates change.
FAQ
Is a sales order the same as an order confirmation?
They are very close. The sales order is the internal record, and the order confirmation is the copy sent to the buyer. Many small businesses use one document for both.
Do I need a sales order if I already have a quote?
Not always. An accepted quote can do the job. A sales order helps when several departments handle an order or when details change after acceptance.
Who signs a sales order?
Usually the seller. A buyer's acknowledgment can be added if you want written agreement to changes.
Can a sales order be changed?
Yes, but record each change with a revision number and tell the buyer.
Same deal, same numbers, two documents: one confirming what is being bought, the other confirming what is being sold. Knowing which one you are looking at keeps a multi-document transaction from turning into a paperwork tangle.