20 June, 2022

Sales order benefits and best practices

The sales order process is one of the most essential workflows for most businesses. Optimizing the process can save money and time as well as enhance the customer experience. Businesses with efficient sales order processing in place have recognized a boost in cash flow and productivity. However, an inefficient sales order system has direct consequences on business performance – data errors, inability to fulfill orders, and slow cash flow.

So, what exactly is a sales order? How does it benefit your business? And what steps are needed to optimize the process?

Sit tight! We’re going to take you through the entire process including:

  • What a sales order is and the sales order process.
  • Why you should automate sales orders.
  • What the benefits of sales order automation are for businesses.
  • What the best practices are to optimize sales order processing.
  • How Cin7 can help your business optimize your sales order process.

 

What is a sales order?

A sales order is an official document generated by the seller when a customer places an order for a specific product or service. It’s generated in response to a purchase order (PO).

Just as a refresher, a PO is created by the buyer and delivered to the supplier for specific materials at agreed upon terms and conditions. The sales order is confirmation of the PO issued by the supplier and given to the buyer prior to delivery. The purchase order creates the contract and the sales order approves the sale.

The entire process is generally completed in three basic steps:

  1. The buyer generates a purchase order and delivers it to the seller requesting a certain quantity of materials at a certain price. Other items on the PO can include delivery schedule, delivery address, and purchase terms.
  2. Considering the purchase order, the seller issues a sales order for the buyer. The sales order approves the sale, sets payment details, and confirms the items on the PO that are included in the sale.
  3. Once the seller processes the order, the seller generates an invoice from the sales order for final payment from the buyer.

For those businesses that generate a handful of sales orders every few months, the process can be done quite simply using a manual system. However, businesses with a high sales volume cannot successfully generate manual sales orders without risk of errors.

Using manual entry for every sales order increases your risk of human error. Mistakes in quantity and pricing on the sales order lead to accounting errors. Using an automated sales order process dramatically lowers the risk of human error and accounting mishaps.

A sales order is also a critical document used for inventory management. It maintains a record of orders and provides information on inventory status. Using sales orders also allows you to track products in stock and on backorder.

 

The evolution of sales order automation

In the “old” days, managing orders involved many hands and mountains of paperwork. The lack of automated order management software meant that individuals from different departments needed to work together to manage inventory through the sales process, maintain accurate shipping and receiving details, and generate purchase and sales orders.

Using emerging technologies and innovation, traditional sales order processing has quickly adopted digital solutions. Consumer-oriented sellers like online retailers are aggressively embracing new techniques to extract specifications directly from purchase orders, eliminating manual input.

Electronic data interchange (EDI) systems are fully automated sales order processing applications. EDI uses optical character recognition to extract the information from paper and quickly – and accurately – transform the information into electronic data. Information is automatically entered into a human-related format and flagged should something require a recheck.

This is a far cry from using CRM solutions to generate quotes, orders, and invoices. CRM tools are unable to create new sales orders. At best, they handle customer information and sales history – as well as work for their intended use of contact management.

 

Benefits of sales order automation for businesses

Using an automated sales order system makes it simple to manage and update orders using a single platform. Moreover, implementing digital solutions increases the capability to respond to orders from all channels. In contrast to traditional sales order processing, automation can offer a wide array of benefits:

#1 Process orders faster

Automation is up to 75% faster compared to using a manual process. Eliminating manual coordination and data entries from the process leads to faster processing. It helps streamline each phase of the process, allowing businesses to pick and ship customer orders more quickly, save on processing costs, and enhance the customer experience.

#2 Maximize productivity and profitability

Using inventory and order management software, businesses can easily automate the entire sales order process. With this software, you can instantly create sales orders, shipping orders, and invoices thereby speeding up your order to cash process.

Another benefit of using automated sales order software is that it automatically counts and tracks your inventory. Additionally, you can set automatic notifications to alert you when your inventory levels are low.

In a nutshell, the faster you process and ship orders, the faster you get paid. Automation is one of the keys to a healthy cash flow.

#3 Improve accuracy and reduce errors

Automation can minimize or eliminate human interference in sales order processing resulting in improved accuracy. Moreover, some sales order processing systems can automatically extract information from purchase orders and generate sales orders without any manual involvement.

These smart systems are integrated with such features that use keyword detection to prioritize urgent or important orders, ultimately resulting in greater customer satisfaction and fewer returns.

#4 Streamline workflow using cloud-based solutions

Whether you’re a single or multichannel sales environment, cloud-based inventory and order management software can streamline workflow. Cloud-based management solutions provide a central location for all departments, regardless of location, to have real-time access to inventory levels and sales orders. Additionally, cloud-based solutions eliminate the risk of data loss.

Undoubtedly, implementing an easy-to-use software solution to automate your sales order process is a brilliant way to boost productivity and cash flow.

Best practices to optimize sales order processing

There are definitive ways to improve your sales order process. To make the optimization process simpler and easier, many businesses opt to outsource to a company specialized in customizing sales order automation. However, if you are considering the process in-house, here are the best practices that you need to know:

#1 Invest in an order management system

As your business grows, workflow becomes more complex. That’s where implementing an order management system helps minimize manual inventory and order processing tasks to increase sales from multiple locations with complex workflows.

Switching to order management systems means having a single unified platform to manage inventory. It automates the entire order-to-cash cycle. A cloud-based system  is accessible anytime from anywhere.

Making the investment to secure an order management system can ensure better profits in the long run as it requires fewer involvement of internal resources. Automating the process with an order management system will facilitate better communication between teams, improve workflow, and enhance the customer experience.

#2 Automate the entire sale order process

Manual processing is vulnerable to human errors that can quickly turn the sales order process into an expensive blunder. Automation eliminates human error and repetitive tasks.

Automation is able to:

  • Generate the sales order when inventory is confirmed.
  • Show a flag or other warning when inventory level is low.
  • Send purchase orders to suppliers for restocking.
  • Send picking requests to appropriate warehouse managers.
  • Generate customer sales orders.
  • Schedule pickups and estimate shipping costs.
  • Communicate with customers to keep them in a loop.

To manage these processes, you will need to know more about inventory management software and order management systems. With the implementation of these two systems, you can handle the sales process, control inventory, and manage supplier requests from a single platform.

#3 Scrutinize your existing process

To optimize your process, you need to address exactly what you want or need to fix. Therefore, your initial step should be mapping out your current sales order process using a flow chart. Get into the details of each step to reveal all the nuances involved in the process. Include details about how long the process takes. Use this audit to easily address potential holes in your process.

These are just a few of the best strategies you can use to streamline your sales order process.

 

Cin7 can help you optimize your sales order process

Automating the sales order process can help establish a workflow that requires less human involvement and minimizes processing time – from initiating a sale through delivery. Automation fosters business growth. So, instead of implementing standard solutions, allow Cin7 to empower you with the flexibility to design a platform to match your business needs – and grow as your business grows.

Cin7 sales order management software makes it easy to manage your entire sales process from anywhere at any time. Offering a cloud-based system helps your team be more efficient and productive. By implementing Cin7 you can create automated workflows to keep your team connected and informed.

Want to learn more? Let a Cin7 representative walk you through the benefits of our order management software. Book a FREE demo today!

TAGS

CATEGORIES

Retail

SHARE THIS POST

Stop managing your inventory.
Start connecting it.

You might also like

12 ways to bring customers into your retail store

The primary goal of any retail business is to attract and retain customers. Learn how to attract customers to your store with these tips.

3 Examples of Creative Brick-and-Mortar

What is retail in this day-and-age? eCommerce has changed the landscape so quickly, it may be difficult for small or new businesses to see how or if a physical store fits in their strategy. Yes, the customers are out there and they continue to shop in store more than online, at least for the time […]

“How Cin7 saves us $130,000 a year.”

Jennifer Xidias on how Cin7’s inventory management integrations saves Peta+Jain time and hundreds of thousands of dollars, every year. One of the most quantifiable things in my decision to go with Cin7 as my software choice was not only its futuristic focus, but also the amount we could save on our IT spend.   Most […]

Fashion & apparel