9.1 Sales Orders and General Ledger Impact
Key Takeaways
A standard sales order is a non-posting promise. Oracle Help states that it does not post an amount to ledger accounts.
On the Standard Sales Order form, a selected payment method bills as a cash sale. Terms, or neither terms nor a payment method, bill as an invoice.
An invoice for a $100 item debits accounts receivable and credits income. That invoice is the transaction that creates the receivable.
A cash sale for the same $100 item debits undeposited funds or the selected cash account and credits income. It does not create accounts receivable.
A later customer payment credits accounts receivable. Inventory fulfillment debits cost of goods sold and credits the inventory asset for the item's cost, not for the $100 price.
Order-to-cash starts when you record what you promised the customer. Oracle Help's Creating Sales Orders topic says you enter a sales order for items and services you promise, then fulfill it to track what is delivered and what is still pending. The same topic states that sales orders do not affect your general ledger. The Sales Transaction GL Impact topic is just as direct: a sales order is a non-posting transaction, and it does not post an amount to your ledger accounts. Entering the order does not debit accounts receivable, does not debit cash or undeposited funds, and does not credit income. The record exists so fulfillment and billing know what was promised. The dollars move on later transactions.
Entering the order
Open Opportunities > Transactions > Sales Orders > New and set Custom Form to Standard Sales Order. The general-ledger topic also lists Transactions > Sales > Enter Sales Orders. Either path creates the same kind of record. The minimum fields are the customer, the date, the status, and at least one line on the Items subtab. The date defaults to today. Status is Pending Approval or Pending Fulfillment. If Projects is enabled, the customer field can be a project or job. Help warns that changing the project after the order is billed detaches the sales order from the invoice, so set the project before you bill. The form, not the extra header fields, decides which billing transaction NetSuite creates.
Forms that decide the bill
Help lists these predefined sales order forms. An administrator can also build custom forms.
- Standard Sales Order can bill as an invoice or a cash sale. The choice depends on payment terms or a payment method, as the next section explains.
- Standard Sales Order - Cash Sale bills as a cash sale.
- Standard Sales Order - Invoice bills as an invoice.
- Standard Sales Order - Progress Billing bills at intervals as goods or services are fulfilled. That schedule belongs to this form. A payment method on the standard form does not switch the order onto it.
Why a payment method becomes a cash sale
The Standard Sales Order form topic states the billing rule in three sentences. If you add a payment method, NetSuite creates a cash sale when you bill. If you select payment terms, NetSuite creates an invoice when you bill. If you add neither terms nor a payment method, NetSuite creates an invoice when you bill. Terms also cause a credit-limit check when the customer has a credit limit. A payment method does not run that check.
Billing a Standard Sales Order that has a payment method selected creates a cash sale. It does not create a progress invoice, a customer payment, or an invoice. Help reserves the cash sale for assured payment at the time of the sale: a credit card, a check, or cash. The payment method is that signal, so the bill records income and the funds together. A progress bill comes only from Standard Sales Order - Progress Billing. A customer payment is a later collection against an invoice that already debited accounts receivable. The bill step does not insert that payment. An invoice is the result only when the order has terms, or neither terms nor a payment method. Sales-order import uses the same split.
Creating the invoice or cash sale
Help calls the sales order a promise to deliver and says it does not affect your accounts until you deliver the goods and create an invoice or cash sale. The order record stays non-posting. Fulfillment and billing are the transactions that post. The cash-sale form produces a cash sale. The invoice form produces an invoice. The standard form follows the payment-method and terms rules.
Advanced Shipping, covered next, decides whether fulfill and bill are one step. Without it, go to Transactions > Sales > Fulfill Orders, select the customer and location, click Fulfill, and save. NetSuite opens the invoice or cash sale. With Advanced Shipping, you save an item fulfillment first, and accounting later bills what shipped. One order or many can be processed. With Multiple Currencies, the new transaction keeps the sales order's currency.
A $100 item, and which transaction posts
Walk one inventory item with a selling price of $100. Do not invent account numbers. Help's journal examples name the accounts. The names below are those names: accounts receivable, income (Help's sample account is Sales Income), undeposited funds, cost of goods sold, and the inventory asset account.
The sales order for $100 posts nothing. There is no receivable and no cash debit. Help is explicit that the order does not post an amount to ledger accounts.
The item fulfillment posts for an inventory item that is actually shipped. Record it at Transactions > Sales > Fulfill Orders. Help's fulfillment example debits cost of goods sold and credits the inventory asset account for the item's cost. That cost is not the $100 price. Fulfillment does not create the receivable and does not debit cash for the selling price. With Pick, Pack, and Ship, only Shipped posts. A drop shipment that never enters inventory does not post this pair.
The invoice creates the receivable. You get one when the standard form has terms, when it has neither terms nor a payment method, or when the form is Standard Sales Order - Invoice. Help's invoice debits accounts receivable and credits income. Here that is a $100 debit to accounts receivable and a $100 credit to income. The customer owes $100. Cash has not moved.
The cash sale creates the cash debit. You get one when the Standard Sales Order has a payment method, or when the form is Standard Sales Order - Cash Sale. Help's example debits Undeposited Funds and credits income, because the money is not yet in the bank. Here that is a $100 debit to undeposited funds and a $100 credit to income, with no accounts receivable line. If the payment method deposits to a bank account, that bank account is the debit instead. Do not also enter a customer payment for the same $100. The cash sale already collected it.
The customer payment belongs only on the invoice path. Record it at Transactions > Customers > Accept Customer Payments or Customers > Accounts Receivable > Accept Customer Payments. Help's example debits Undeposited Funds and credits accounts receivable. For this invoice that is a $100 debit to undeposited funds, or to the bank if the money is already deposited, and a $100 credit to accounts receivable. Income is not credited again. One accounts receivable account is used automatically, and the A/R Account field may be hidden. Only invoices on the selected receivable account can be applied.
Transaction, ledger effect, and origin
| Transaction | Typical GL effect | When it is created from a sales order |
|---|---|---|
| Sales order | Non-posting. No amount posts to ledger accounts. | Entered to record the promise to the customer. |
| Item fulfillment | For a shipped inventory item, debits cost of goods sold and credits inventory for the item's cost, not the $100 price. | Created when you fulfill. Without Advanced Shipping, this step is combined with billing. |
| Invoice | Debits accounts receivable and credits income for $100. This creates the receivable. | Billing when the standard form has terms, or neither terms nor a payment method, or when the invoice form is used. |
| Cash sale | Debits undeposited funds or the selected cash account and credits income for $100. No receivable. | Billing when the Standard Sales Order has a payment method, or when the cash-sale form is used. |
| Customer payment | Debits undeposited funds or the bank and credits accounts receivable for $100. | Not created by billing. Entered later to collect the open invoice. |
You bill a sales order entered on the Standard Sales Order form, and a payment method is selected on that order. Which transaction does NetSuite create?
A progress invoice, because a payment method moves the order onto the progress-billing form and bills a share of fulfillment.
An invoice that debits accounts receivable, because a payment method on the Standard Sales Order form always opens a receivable.
A cash sale, because a payment method on the Standard Sales Order form tells billing to create a cash sale.
A customer payment and no bill, because the payment method posts cash directly from the non-posting sales order.
You save a sales order for an inventory item and have not fulfilled or billed it. Which ledger result matches the sales-order rules in this section?
No amount posts. The sales order is non-posting, so it does not create a receivable or a cash debit.
Accounts receivable is debited and income is credited, because saving the order creates the receivable.
Undeposited funds is debited and income is credited, because the selling price is collected when the order is saved.
Cost of goods sold is debited and inventory is credited for the selling price, because saving the order ships the item.
A cash sale has already been created from a Standard Sales Order that had a payment method. What else should you enter to collect that same sale?
A customer payment that credits accounts receivable, because every bill still leaves an open receivable.
An invoice for the same amount, because a cash sale records inventory only and does not credit income.
A second sales order with terms, because the cash sale stays non-posting until an invoice exists.
No further collection record. The cash sale already debited undeposited funds or the cash account and credited income, and it did not create a receivable.
Sections you finish are checked off in the contents.