The Difference Between a Sales Order, a Estimate, and an Invoice
The sales process in the system goes through three documents that you can use all or some of: the quotation you give the client before agreement, the sales order that records the client’s confirmed request, and the invoice, which is the financial document that proves the sale. This guide explains the difference between them, the effect of each on accounts, stock, and the client’s balance, and how to convert from one document to another.
The Difference at a Glance
| Comparison | Quotation | Sales Order | Invoice |
|---|---|---|---|
| Purpose | A preliminary price offer before the client’s approval. | Confirming the client’s request before invoicing. | Proving the sale and claiming the amount. |
| Accounting entry | No | No | Yes |
| Client balance | No effect | No effect | Increases the amount due from the client |
| Receiving payments | No | No | Yes |
| Stock | No effect | No effect except through a stock issue requisition | Issues the quantity (or via a stock requisition when enabled) |
| Conversion | To one invoice or one sales order | To one or more invoices (partial conversion) | — |
| Needs activation | Enabled by default and can be turned off from the sales settings | Must be enabled from the sales settings | Always available |
When to Use Each Document
- Quotation: when the client asks for a price before deciding, or you need their approval of the items and prices.
- Sales order: when the client confirms their request but delivery or invoicing happens later or in installments, and you want to track what has been invoiced and what remains.
- Invoice: when the sale is completed; directly, or by converting from a quotation or a sales order.
Before You Start
- To use sales orders, enable Enable Sales Orders from Sales Settings → Sales Order Settings.
- You can turn off quotations from the quotation settings if you don’t use them.
- Each document has independent permissions for adding, editing, deleting, and viewing, and converting a sales order to an invoice has its own permission.
Statuses of Each Document
| Document | Statuses |
|---|---|
| Quotation | Draft, Open, Sent, Viewed, Approved, Converted to Invoice, Ordered (converted to a sales order). |
| Sales Order | Draft, Open, Partially Converted to Invoice, Converted to Invoice. |
You can also enable custom statuses for quotations and for sales orders from the settings of each.
Steps to Convert Between Documents
Converting a Quotation to an Invoice
- View the quotation from the quotations list.
- From the actions bar, click the Convert to Invoice button. If the client hasn’t approved the quotation yet, the system asks you to confirm treating it as approved.
- A new invoice screen opens with the quotation’s data; review it and click Save.
The quotation’s status becomes Converted to Invoice. A quotation can be converted to only one invoice, and if the invoice is deleted, the quotation returns to Approved.
Converting a Quotation to a Sales Order
- From the quotation’s actions bar, click the Convert to Sales Order button (it appears when sales orders are enabled).
- Review the sales order data and click Save.
The client’s approval of the quotation isn’t required. The quotation’s status becomes Ordered, it cannot be converted to more than one sales order, and the client must be the same.
Converting a Sales Order to an Invoice
- Open the sales order from Sales Orders.
- From the actions bar, click the Convert to Invoice button.
- Only the quantities not yet invoiced appear; adjust them if you’re invoicing part of the request, then save.
- Repeat the conversion later to invoice the remaining quantities.
Example: a sales order for 100 units. You invoiced 40 units: the order’s status becomes “Partially Converted to Invoice.” When you convert a second time, only 60 units appear, and after invoicing them the status becomes “Converted to Invoice.”
How the System Works
- A quotation and a sales order don’t create any accounting entry, don’t change the client’s balance, and don’t accept payments. The entry and the amount due start from the invoice.
- A sales order doesn’t reserve stock. If stock requisitions for sales invoices are enabled, you can create an issue requisition from the sales order; stock is issued when it is approved, and when converting, the invoice lines are taken from the approved requisitions.
- The client can approve the quotation from the client portal using the Approve Quotation button, so its status changes to Approved and a notification reaches the responsible employee.
Validation Rules
- A quotation that was previously converted to an invoice or a sales order cannot be converted.
- A sales order in Draft status cannot be converted, nor can a sales order that has been fully invoiced.
- The invoice quantities cannot exceed the remaining quantities in the sales order, nor can a line not present in it be added; unless you enabled the option to allow issuing an invoice with item quantities exceeding the quantities specified in the sales order and you have the conversion permission.
- A sales order that has been fully or partially invoiced cannot be deleted.
- If all the stock requisitions of a sales order are rejected, it cannot be converted to an invoice.
Frequently Asked Questions
- Must I go through all three documents? No, you can issue an invoice directly, or start with a quotation or a sales order depending on how you work.
- Why doesn’t the sales order appear in the menu? Because it isn’t enabled; enable it from the sales order settings.
- Does a sales order affect stock? No, unless you create a stock issue requisition from it and approve it.
- Can I receive an advance payment on a sales order? A sales order doesn’t accept payments; convert it to an invoice or use an advance payment invoice.
- Can a quotation be converted to more than one invoice? No; to invoice the request in installments, convert the quotation to a sales order, then invoice it partially.
- I deleted the invoice converted from a quotation. What happens to the quotation? It returns to the Approved status and can be converted again.