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Purchase & Sales Order Processing in Tally Prime

Purchase & Sales Order Processing in Tally Prime

Complete Study Material, Examples, Practical Exercises & Viva Questions

Sales Order Purchase Order Delivery Note Receipt Note Sales Invoice Purchase Invoice

Table of Contents

  1. Purpose of Order Processing
  2. Enabling Order Processing
  3. Creating Sales Orders
  4. Creating Purchase Orders
  5. Converting Orders into Invoices
  6. Reports for Order Tracking
  7. Complete Order Processing Workflow
  8. Worked Example
  9. Sales Order vs Purchase Order
  10. Practice Questions
  11. Practical Assignment
  12. Viva Questions
  13. Quick Revision

1. Purpose of Order Processing

Order processing is the process of recording, tracking and fulfilling customer orders and supplier orders. It helps an organization know what has been ordered, what has been delivered or received, and what quantity is still pending.

Document Meaning Issued By Purpose
Sales Order Request/order received for goods or services Customer Records what the customer wants to purchase
Purchase Order Order placed for purchasing goods or services Buyer Records what the business wants to purchase
Delivery Note Records goods delivered Seller Tracks goods delivered against a Sales Order
Receipt Note Records goods received Buyer Tracks goods received against a Purchase Order

Why is Order Processing Important?

  • Tracks pending customer orders.
  • Tracks pending purchase orders.
  • Helps monitor delivery and receipt status.
  • Reduces the possibility of missed orders.
  • Helps plan inventory requirements.
  • Provides information for outstanding reports.
  • Creates a systematic flow from order to invoice.
Basic Business Flow:
Order → Delivery / Receipt → Invoice → Payment

2. Enabling Order Processing

Before entering Sales Orders or Purchase Orders, the relevant order processing features must be enabled in the company.

Steps

1 Go to Gateway of Tally → F11 (Features).
2 Open the relevant Inventory Features.
3 Turn ON Enable Sales Order Processing.
4 Turn ON Enable Purchase Order Processing.
5 Save/accept the settings.
Note: The exact wording or location of configuration options can vary depending on the Tally Prime release and company configuration. Always verify the current screen in the version being used for training.

3. Creating Sales Orders

A Sales Order records the goods or services that a customer has ordered. It is useful for tracking what needs to be delivered and by when.

Navigation

Gateway of Tally → Vouchers → Sales Order

Shortcut: Alt + F5

Steps to Create a Sales Order

  1. Select the Customer Ledger.
  2. Enter the Order Number.
  3. Enter the Order Date.
  4. Select the required Stock Item.
  5. Enter the Quantity.
  6. Enter the Rate.
  7. Enter applicable GST/tax details, where relevant.
  8. Enter delivery-related details if required.
  9. Accept and save the voucher.
Example:

Customer: ABC Traders
Product A: 100 units @ ₹50

Order Value: 100 × ₹50 = ₹5,000

The Sales Order records the customer’s requirement. It does not by itself mean that all 100 units have been delivered.

4. Creating Purchase Orders

A Purchase Order records the goods or services that a business intends to purchase from a supplier.

Navigation

Gateway of Tally → Vouchers → Purchase Order

Shortcut: Alt + F4

Steps to Create a Purchase Order

  1. Select the Supplier Ledger.
  2. Enter the Order Number.
  3. Enter the Order Date.
  4. Select the required Stock Item.
  5. Enter the Quantity.
  6. Enter the Rate.
  7. Enter applicable GST/tax details, where relevant.
  8. Enter expected receipt/delivery details if required.
  9. Accept and save the voucher.
Example:

Supplier: XYZ Suppliers
Raw Material X: 200 units @ ₹40

Purchase Order Value: 200 × ₹40 = ₹8,000

The Purchase Order shows what the business has ordered from the supplier. The goods are considered received only when the appropriate receipt transaction is recorded.

5. Converting Orders into Invoices

Orders can be followed by inventory documents and finally by invoices. This allows the business to track the entire transaction.

Sales Process

Sales Order → Delivery Note → Sales Invoice
Stage Purpose
Sales Order Records what the customer ordered.
Delivery Note Records what has actually been delivered.
Sales Invoice Records the sale and amount to be collected.

Purchase Process

Purchase Order → Receipt Note → Purchase Invoice
Stage Purpose
Purchase Order Records what the business ordered from the supplier.
Receipt Note Records what goods have actually been received.
Purchase Invoice Records the purchase and amount payable to the supplier.
Important: An order is not the same as an invoice. An order represents a commitment or requirement, while an invoice records the financial transaction.

6. Reports for Order Tracking

Outstanding reports help identify orders that have not been fully fulfilled.

Sales Order Outstanding

Gateway of Tally → Display More Reports → Inventory Books → Sales Order Outstanding

Purchase Order Outstanding

Gateway of Tally → Display More Reports → Inventory Books → Purchase Order Outstanding

Information Commonly Tracked

Information Purpose
Order Number Identifies the order
Party Name Identifies customer or supplier
Item Identifies the ordered stock item
Ordered Quantity Shows the original order quantity
Pending Quantity Shows the quantity still outstanding
Due Date Helps monitor expected fulfillment
Basic Formula:
Sales Order Outstanding = Ordered Quantity − Delivered Quantity Purchase Order Outstanding = Ordered Quantity − Received Quantity

7. Complete Order Processing Workflow

Sales Order Workflow

Customer Order → Sales Order → Delivery Note → Sales Invoice → Payment

Purchase Order Workflow

Purchase Requirement → Purchase Order → Receipt Note → Purchase Invoice → Payment
Think of the process like this:

Order = What was requested?
Delivery/Receipt = What actually moved?
Invoice = What was financially recorded?
Outstanding = What is still pending?

8. Worked Example – Sales Order

Step 1 – Sales Order

A customer orders 100 units at ₹50 per unit.

Ordered Quantity = 100 units Rate = ₹50 Order Value = 100 × ₹50 = ₹5,000

Step 2 – Delivery Note

The business delivers only 60 units.

Ordered Quantity = 100 units Delivered Quantity = 60 units Outstanding Quantity = 100 − 60 = 40 units Outstanding Value = 40 × ₹50 = ₹2,000

Step 3 – Sales Invoice

A Sales Invoice is raised for the quantity actually being invoiced, according to the transaction and configuration.

Particular Quantity Rate Value
Product A 60 ₹50 ₹3,000
Pending 40 ₹50 ₹2,000
Outstanding Report Result:

The order still has 40 units pending.

Step 4 – Remaining Delivery

If the remaining 40 units are delivered later:

Total Ordered = 100 Total Delivered = 100 Outstanding = 100 − 100 = 0 units
Final Status: No quantity remains outstanding after complete fulfillment.

9. Sales Order vs Purchase Order

Basis Sales Order Purchase Order
Purpose Records customer order Records supplier order
Party Customer Supplier
Goods Movement Goods are delivered Goods are received
Next Document Delivery Note Receipt Note
Final Invoice Sales Invoice Purchase Invoice
Outstanding Report Sales Order Outstanding Purchase Order Outstanding

10. Practice Questions

Question 1 – Sales Order

Customer ABC Ltd. orders:
  • 50 units of Product A @ ₹200
  • 30 units of Product B @ ₹150
Task:
  1. Create the Sales Order.
  2. Calculate the total order value.
  3. Identify the initial outstanding quantities.
Expected Calculation:
Product A = 50 × ₹200 = ₹10,000 Product B = 30 × ₹150 = ₹4,500 Total Order Value = ₹14,500 Initial Outstanding: Product A = 50 units Product B = 30 units

Question 2 – Partial Delivery

From Question 1, deliver:
  • 30 units of Product A
  • 20 units of Product B
Task: Calculate the remaining outstanding quantity.
Product A: 50 − 30 = 20 units
Product B: 30 − 20 = 10 units

Total Pending: 30 units

Question 3 – Purchase Order

Place a Purchase Order with XYZ Suppliers for:
  • 200 units of Raw Material X @ ₹75
Task:
  1. Create the Purchase Order.
  2. Calculate the order value.
  3. Identify the initial outstanding quantity.
Order Value: 200 × ₹75 = ₹15,000

Initial Outstanding: 200 units

Question 4 – Partial Receipt

From Question 3, receive only 120 units.

Task: Calculate the pending quantity and pending value.
Pending Quantity: 200 − 120 = 80 units
Pending Value: 80 × ₹75 = ₹6,000

Question 5 – Complete Fulfillment

A customer orders 500 units of Product Z. All 500 units are delivered.

Task: What quantity will remain outstanding?
Outstanding: 500 − 500 = 0 units

Question 6 – Multiple Orders

Customer LMN Ltd. places:
  • Order 101: 100 units of Item A
  • Order 102: 150 units of Item B
  • Order 103: 200 units of Item C
Deliver:
  • Order 101: 70 units
  • Order 102: 100 units
  • Order 103: 200 units
Task: Calculate the outstanding quantity for each order.
  • Order 101 → 30 units pending
  • Order 102 → 50 units pending
  • Order 103 → 0 units pending
Total Outstanding = 80 units

Question 7 – Due Date Tracking

A customer places an order for 300 units on 01-Sep-2026. The delivery due date is 10-Sep-2026. By the due date, only 220 units have been delivered.

Task:
  1. Calculate the pending quantity.
  2. Calculate the pending value if the rate is ₹100 per unit.
  3. Explain why the due date is important in order tracking.
Pending Quantity: 300 − 220 = 80 units

Pending Value: 80 × ₹100 = ₹8,000

Question 8 – Mixed Order Processing

Create the following transactions in Tally Prime:
  1. Sales Order for 100 units.
  2. Delivery Note for 60 units.
  3. Sales Invoice for the delivered quantity.
  4. Delivery Note for the remaining quantity.
  5. Complete the Sales Order.
  6. Check the Sales Order Outstanding Report.
Task: Explain how the outstanding quantity changes after each step.

11. Practical Assignment

Company: ABC Traders

Complete the following complete Order Processing cycle in Tally Prime.

Part A – Sales Order

Item Quantity Rate
Product A 100 ₹250
Product B 50 ₹400
  1. Create the customer ledger.
  2. Create the required stock items.
  3. Enter the Sales Order.
  4. Record a Delivery Note for 60 units of Product A and 30 units of Product B.
  5. Check Sales Order Outstanding.
  6. Deliver the remaining quantities.
  7. Generate the Sales Invoice.
  8. Verify that no order quantity remains outstanding.

Part B – Purchase Order

Item Quantity Rate
Raw Material X 200 ₹80
Raw Material Y 100 ₹120
  1. Create the supplier ledger.
  2. Create the stock items.
  3. Enter the Purchase Order.
  4. Record a Receipt Note for 150 units of Raw Material X and 60 units of Raw Material Y.
  5. Check Purchase Order Outstanding.
  6. Receive the remaining quantities.
  7. Generate the Purchase Invoice.
  8. Verify the final outstanding quantity.
Student Activity: At each stage, write down:
  • Ordered Quantity
  • Delivered/Received Quantity
  • Pending Quantity
  • Invoice Quantity
  • Final Outstanding Quantity

12. Viva Questions

1. What is a Sales Order?
2. What is a Purchase Order?
3. Who issues a Sales Order?
4. To whom is a Purchase Order issued?
5. What is the purpose of a Delivery Note?
6. What is the purpose of a Receipt Note?
7. What is an Outstanding Report?
8. How is Sales Order Outstanding calculated?
9. How is Purchase Order Outstanding calculated?
10. What is the difference between a Sales Order and a Sales Invoice?
11. What is the difference between a Purchase Order and a Purchase Invoice?
12. What happens when only part of an order is fulfilled?
13. What happens when the complete order is fulfilled?
14. Why are due dates used in order processing?
15. Why should Order Processing be enabled in Tally Prime?

13. Quick Revision Chart

Document Question It Answers Follow-Up
Sales Order What did the customer order? Delivery Note
Delivery Note What did we deliver? Sales Invoice
Sales Invoice What did we bill the customer? Payment
Purchase Order What did we order from the supplier? Receipt Note
Receipt Note What did we receive? Purchase Invoice
Purchase Invoice What did the supplier bill us? Payment
Outstanding Report What quantity is still pending? Further fulfillment

Remember the Golden Formula

Sales Order Outstanding = Ordered Quantity − Delivered Quantity Purchase Order Outstanding = Ordered Quantity − Received Quantity
Final Example:

Order = 100 units
Delivered = 60 units
Outstanding = 100 − 60 = 40 units

Remaining 40 units delivered later:
Outstanding = 100 − 100 = 0 units

14. Conclusion

Purchase and Sales Order Processing in Tally Prime provides a systematic method for managing customer orders and supplier commitments. By linking orders with delivery or receipt documents and subsequently with invoices, businesses can monitor the complete transaction cycle.

Order → Delivery / Receipt → Invoice → Payment

The most important concept for students to remember is that an Outstanding Report shows the unfulfilled portion of an order.

Purchase & Sales Order Processing in Tally Prime – Study Material & Practical Workbook