5 Ways to Optimize Sales Order Processing

Last Updated: February 3, 2025
Sales Order Processing

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One of the most important workflows in business — especially for companies that sell physical products — is sales order processing. Everything should flow seamlessly from the moment a customer initiates an order to when it’s delivered to their door. But in reality, it’s not uncommon to run into hurdles such as slow document processing, inefficient processes, or not anticipating peak periods.

Without a well-optimized system in place, your business is left exposed to operational delays, mistakes, and other risks that harm both revenue and reputation. But fear not: in this blog post, we’ll explore five proven ways to optimize your sales order processing. By implementing these suggestions, you will streamline sales, minimize errors, and keep your customers happy.

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What Is Sales Order Processing?

Sales order processing is the series of steps a business takes to receive, verify, and fulfill customer orders. It begins when a customer places an order and ends when the products are delivered and the transaction is complete. A typical example of this is when retailers order merchandise from their suppliers.

For businesses that sell physical goods, sales order processing consists of the following steps:

  1. Receiving the order: First, the seller receives a purchase order from a customer.
  2. Approving the order: The sales team or sales order processing system verifies that the requested items are in stock, prices are correct, and the other details (like shipping addresses and payment method) are included. During this step, the seller may approve or reject the PO.
  3. Issuing a sales order: The seller issues a sales order that confirms what the customer has requested.
  4. Fulfilling the order: The fulfillment team picks the purchased items, packs them, and then ships them to the buyer’s address.
  5. Invoicing: The seller creates an invoice and sends it to the customer. In the retail industry, sellers include the invoice in the order package.

Note that an inventory management system can automate several of these steps. For example, it can reject a PO if the requested items are out of stock, or send an electronic invoice right after confirming the order.

This process is mostly found in B2B transactions and some B2C cases where consumers purchase high-value items or large quantities of certain products.

Before diving into our suggestions for optimizing your sales order processing, now is a good time to explain how sales orders, purchase orders, and invoices are different from each other. These three documents are present in the same process and share similar information, so it can be confusing to tell them apart sometimes.

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What Is The Difference Between Sales Orders, Purchase Orders, and Invoices?

Purchase order vs sales order

A purchase order (also called PO) is a document created by the buyer that provides information on what they want to buy: date of the order, PO number, goods or services requested, quantity, price, etc. Purchase orders serve as a formal agreement and reference for both parties to prevent miscommunication.

A sales order is a document created by the seller after receiving a PO to confirm the details of the order. The seller issues the sales order after the customer places the order but before fulfillment begins.

So the key difference here is that purchase orders are issued by the customer, whereas sales orders are issued by the seller in response to the purchase order. Also, the purchase order is generated at the beginning of the process, and the sales order comes afterward.

Sales order vs invoice

An invoice is a document sent by the seller to the buyer to request payment for their products or services. It details the items delivered, their prices, taxes, payment terms, etc. Sellers also keep invoices as financial records for bookkeeping purposes.

So the main difference between invoices and sales orders is that the seller creates the sales order before fulfilling the order. The invoice, on the other hand, is issued after the order is delivered or when payment is due.

Also, the two serve different functions. The sales order confirms the order and guides the fulfillment process, while the invoice serves as a request for payment.

Purchase order vs invoice

We know that the buyer creates the purchase order when they initiate the order, and that the seller creates the invoice after fulfilling the order to ask for payment. So as you can tell, the PO starts the transaction process from the buyer’s side, and the invoice completes it on the seller’s side.

So while these three documents are interconnected, each plays a specific role throughout the sales process. They all work together to ensure transparency and trust between the buyer and seller.

Okay, so now that we have cleared up any ambiguity regarding these terms, let’s find out how you can optimize sales order processing in five ways.

5 Ways to Optimize Your Sales Order Processing

To ensure your sales order processing is smooth and efficient, we recommend that you implement these five tips:

1. Automate data entry

Let’s be honest: no one enjoys inputting large amounts of data from purchase orders, sales orders, and invoices into a business application. It takes so much time and requires a lot of attention to avoid errors. This can create crippling bottlenecks in sales order processing.

By automating this step, you can process orders much faster and minimize embarrassing mistakes. This is done using an automation solution that can extract data fields from documents quickly and reliably. And that’s what Docparser is built to do. You just follow these three steps:

  1. You upload new purchase orders to Docparser.
  2. Docparser follows parsing rules to extract all data fields (PO number, date, customer name, line items, etc.). You can create and customize parsing rules easily with DocparserAI.
  3. After extracting data points from POs, Docparser sends them to a cloud app of your choice like Sage.

As a result, you cut down processing times, eliminate human error, and boost data accuracy. Furthermore, automating data entry helps you establish a foundation for scalability as your business grows and you start receiving larger order volumes.

2. Streamline sales order workflows

Next, we recommend that you review your sales order workflows and pinpoint the tasks that are time-consuming, redundant, or error-prone. Be sure to assess every step of the process. Where exactly do delays and mistakes occur? And where do you lack visibility on the process?

Once you identify inefficiencies and redundancies, consider taking these actions:

  • Implement sales order processing automation tools to centralize information and automate repetitive tasks like order validation and approvals.
  • Invest in an inventory management system that lets you track stock levels in real-time, automate simple tasks like reordering, analyze data, etc.
  • Use a collaborative tool to ensure effective communication among team members and across departments.
  • Integrate your systems with each other to track the entire sales workflow across multiple channels and eliminate data silos.

To illustrate, a retailer can automate the stock verification step so that orders for out-of-stock items won’t be confirmed. Moreover, the manager is automatically notified about low stock levels so they can reorder items promptly.

Streamlined Sales Order Processing

By streamlining your workflows, you reduce the time needed to process sales orders, minimize mistakes, and deliver your products or services much faster than before. Buyers will be delighted to receive what they ordered sooner, which boosts customer retention and loyalty.

3. Invest in staff training

Implementing new systems and tools means that your team needs to learn how to use them. The same goes for processes and workflows: staff must be able to carry them out properly. Everyone needs to be on the same page and communicate effectively with each other to avoid misunderstandings and mistakes.

So take the time to develop a training program that covers your objectives, methods, skills, and tools. Consider preparing learning materials, courses, webinars, workshops, coaching sessions, and tests.

After training is completed, be sure to track the performance of trained employees so you can measure the training results. And don’t forget to collect their feedback and adjust your training when necessary.

In short, investing in staff training makes everyone in the team software-savvy, communicative, and adaptable. This, in turn, makes it much easier to scale operations smoothly as your business grows.

4. Forecast demand

Receiving orders is great until you can’t keep up with them anymore. To avoid stockouts, disappointed customers, and overworked teams, you should anticipate demand ahead of time.

Similarly, you don’t want to order large quantities of certain items, only for them to collect dust in the warehouse. That’s why you need to forecast demand.

So you should analyze your historical sales data to identify market trends, seasonal fluctuations, and peak periods. Look up how much you sell on average on a given period of time and also how much promotions increase sales. Then, determine the expected stock levels accordingly, collaborate with suppliers, and add more staff to the fulfillment team when needed.

Demand Forecasting

By anticipating customer demand, you can plan ahead for upcoming weeks and months. With accurate demand forecasting, you optimize both inventory and manpower to avoid overstocking as well as stockouts, bottlenecks, and fulfillment delays during peak periods.

5. Monitor and improve processes

Optimization isn’t a one-time effort—it requires continuous monitoring and adjustment. You want to review your sales order processes periodically to identify areas of improvement and adapt to market changes.

To monitor your processes, we suggest you track the following key metrics:

  • Order cycle time: the processing time from order to delivery
  • Order accuracy rate
  • Cost per order processed
  • Order exception rate: the percentage of orders that encounter issues like stockouts, mismatched data, or delays
  • Customer satisfaction score

Use your systems for real-time visibility into these metrics. That said, it takes more than that to have a comprehensive view of your sales order processes. So make sure to collect feedback from both customers and employees to address pain points. Moreover, you want to conduct regular audits to identify bottlenecks or inefficiencies.

Here is a quick example: a clothing retailer notices through Order Cycle Time tracking that delays in internal approvals are slowing down fulfillment, causing missed delivery dates. They streamline their workflow by automating approvals for standard orders, cutting their cycle time by 30%. This leads to faster deliveries, improved customer satisfaction, and a noticeable increase in repeat purchases.

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Efficient sales order processing depends on streamlined workflows, clear communication across teams, and reliable technology. To achieve this, we recommend you automate data entry, streamline sales order workflows, train staff, forecast demand, and monitor processes continuously. Businesses that do this go on to reduce order cycle times, avoid issues, and win over more customers.

If your sales order processing is held back by the tedium of data entry, now is the perfect time to replace it with intelligent document processing.

Picture this: incoming purchase orders are automatically processed and all the data fields are sent to your sales order processing system in a matter of minutes. No need to type information or copy and paste it anymore. Interested? Try Docparser for free and start automating your data entry processes.

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