Order Processing — Purchase and Sales Orders
Full order cycle for Sunrise Retail: Sales Order → Delivery Note → Sales Invoice with Digital Hub, and Purchase Order → GRN → Purchase Invoice
Module 17 of 31 — Tally Prime. The complete order-to-invoice cycle — Sales Order → Delivery Note → Sales Invoice, with Sunrise Retail's actual order to Digital Hub Retail. Duration: 45 min.
Prerequisites: Module 09 — Purchase Voucher | Module 10 — Sales Voucher
Learning Objectives
- Enable order processing in Tally Prime via F11
- Walk through the complete Sales Order → Delivery Note → Sales Invoice cycle
- Walk through the complete Purchase Order → Receipt Note (GRN) → Purchase Invoice cycle
- Track pending (unfulfilled) orders using Order Outstanding report
Enable Order Processing
Once enabled, four new voucher types appear:
- Purchase Order (in the Vouchers menu)
- Sales Order (in the Vouchers menu)
- Receipt Note / GRN (Goods Received Note)
- Delivery Note / Dispatch Note
Why Use Orders?
Without orders, you raise an invoice only after delivery. Orders let you:
- Commit stock to a specific customer before shipping
- Track what's been promised vs delivered
- Know purchase commitments before goods arrive
- Raise partial deliveries and invoices against a single order
Financial impact: None at PO/SO stage. Only when goods physically move (GRN / Delivery Note) and when the invoice is raised do entries appear in books.
The Full Sales Order Cycle
Sunrise Retail → Digital Hub Retail (April 2025)
Digital Hub Retail, Secunderabad places a bulk order for 50 Samsung phones and 10 Dell laptops for their monthly stock replenishment. Delivery in two batches.
Step 1 — Sales Order (SO)
No financial entry. The Sales Order is a commitment document only — it appears in "Sales Orders Outstanding" report. Sunrise Retail's P&L, balance sheet, and GST returns are unaffected until the invoice is raised.
Step 2 — Delivery Note (First Batch)
On April 10, Sunrise Retail dispatches 30 phones (first batch). The 10 laptops and 20 remaining phones will be dispatched April 15.
Delivery Note reduces stock at the godown immediately. No financial entry — the customer does not yet owe money. SO-2025-001 remains open for 20 phones + 10 laptops.
Step 3 — Sales Invoice (Against Delivery Note)
Kiran raises the invoice for the first batch delivered (30 phones):
Now the financial liability is created: Digital Hub owes ₹5,49,408.
Step 4 — Second Delivery (April 15)
On April 15, Sunrise Retail dispatches the remaining 20 phones and all 10 laptops:
Sales Invoice for second batch:
SO-2025-001 is now fully fulfilled — no pending quantities.
Complete Flow Diagram
The Full Purchase Order Cycle
TechWorld Distributors → Sunrise Retail
Sneha places a Purchase Order for May stock before the current stock depletes.
Step 1 — Purchase Order (PO)
No financial entry. PO-2025-001 appears in Purchase Orders Outstanding.
Step 2 — Receipt Note / GRN (Goods Received Note)
On May 5, TechWorld delivers 80 phones. S24 units are delayed — partial receipt.
Stock at Kondapur increases by 80 phones. No payable created yet.
Step 3 — Purchase Invoice
TechWorld sends their invoice on May 7:
Now the payable of ₹11,13,920 to TechWorld Distributors is created. ITC of ₹1,69,920 is available.
The S24 units (20 Nos) remain pending on PO-2025-001.
Tally Screen — Order Outstanding Report
Practice Exercise
Exercise: Sunrise Retail receives a Sales Order from CloudStore Online, Bangalore (GSTIN: 29AABCC9876B1ZH) for 15 Samsung Galaxy S24 phones on May 1. Full delivery made May 5. Invoice raised May 5. Rate ₹75,000 per phone (IGST 18%). Walk through all three steps.
Show Solution
Step 1 — Sales Order (May 1):
Step 2 — Delivery Note (May 5):
Step 3 — Sales Invoice (May 5):
SO-2025-002 fully fulfilled — no pending quantities.
Key Terms
| Term | Meaning |
|---|---|
| Purchase Order (PO) | Formal commitment to buy — no financial or stock entry; tracks pending orders |
| Receipt Note (GRN) | Goods Received Note — updates inventory when goods physically arrive; no payable created |
| Sales Order (SO) | Formal commitment to sell — tracks what's promised but not yet delivered |
| Delivery Note (DN) | Goods Dispatch Note — updates inventory when goods leave; no receivable created |
| Orders Outstanding | Report showing unfulfilled purchase or sales orders |
| Against Ref | Links invoice to GRN or Delivery Note — ensures accurate flow tracking |
Module Summary
- Enable order processing:
F11 → Inventory Features → Purchase/Sales Order Processing: Yes - Sales flow: SO (commitment) → Delivery Note (stock leaves, no P&L) → Sales Invoice F8 (financial entry + GST)
- Purchase flow: PO (commitment) → Receipt Note/GRN (stock arrives, no payable) → Purchase Invoice F9 (payable + ITC)
- Sunrise Retail example: SO-2025-001 to Digital Hub — 50 phones + 10 laptops in two delivery batches, two invoices
- Partial deliveries are fully supported — SO/PO stays open for balance quantity
- Financial entry (P&L, GST, payable/receivable) happens ONLY at the invoice stage
Checklist before moving on:
- F11 → Purchase/Sales Order Processing both enabled
- SO-2025-001 created for Digital Hub (50 phones + 10 laptops)
- DN-2025-001 created for first batch (30 phones) — stock reduces
- SR-2025-0042 raised against DN-2025-001 — payable created
- Order Outstanding report checked — pending quantities visible
Quick Quiz
1. A Sales Order in Tally creates:
- a) A financial receivable from the customer
- b) A stock reduction at the godown
- c) A commitment record — no financial entry or stock movement
- d) Both stock and financial entries
Answer
c) Sales Order is a commitment document only — no financial receivable, no stock movement. These happen only at Delivery Note (stock) and Sales Invoice (receivable) stages.
2. The Receipt Note (GRN) does what in Tally?
- a) Creates supplier payable
- b) Records stock receipt — increases inventory; no financial entry
- c) Files GST return
- d) Generates a delivery challan for dispatch
Answer
b) GRN updates inventory (stock increases at the godown) but does NOT create a financial payable. The payable is created only when the Purchase Invoice (F9) is entered against the GRN.
3. In Sunrise Retail's order to Digital Hub, the financial impact on P&L occurs at:
- a) When the Sales Order SO-2025-001 is created
- b) When the Delivery Note DN-2025-001 is created
- c) When the Sales Invoice SR-2025-0042 is raised
- d) When Digital Hub makes payment
Answer
c) Sales Invoice SR-2025-0042 — only the invoice creates the revenue entry (Cr: Sales) and the receivable (Dr: Digital Hub). The SO and DN are purely operational/logistical documents.
4. What does "Order Outstanding" report show?
- a) Overdue invoices not yet paid
- b) Unfulfilled portions of Sales Orders and Purchase Orders
- c) Bank reconciliation differences
- d) Items out of stock
Answer
b) Order Outstanding report shows Sales Orders with pending delivery quantities and Purchase Orders with pending receipt quantities. It is the primary tool for tracking commitments vs fulfillment.
Next: Module 18 — Price Lists: Multiple Pricing for Different Customers