Direct Sales Paths

Alternative paths that skip fulfillment or Sales Order entirely.

---

Available Direct Paths

Path	From SO?	Creates A/R?	Best For
Invoice Direct	Yes	Yes	Services, pre-billing
Cash Sale Conversion	Yes	No	Immediate payment
Standalone Invoice	No	Yes	Simple billing
Standalone Cash Sale	No	No	POS/Retail

---

Invoice Direct (No Fulfillment)

Skip the fulfillment step - bill directly from Sales Order.

When to Use

• Service items (no physical inventory)
• Drop-ship items
• Non-inventory items
• Pre-billing before shipment

Flow Diagram

DIRECT INVOICE PATH
─────────────────────────────────────────────────────────────────

Sales Order #SO-001
│
│  (Skip Fulfillment)
│
└──▶ Invoice #INV-001 (created directly from SO)
     │
     ├── Revenue recognized
     ├── A/R created
     ├── Inventory reduced (for inventory items)
     └── COGS posted (for inventory items)

Inventory Impact

Invoice Direct does reduce inventory - it combines fulfillment and billing:

Before Invoice Direct:
┌─────────────────────────────────────────┐
│ On Hand:     100                        │
│ Committed:    25 (from SO)              │
│ Available:    75                        │
└─────────────────────────────────────────┘

After Invoice Direct (25 units):
┌─────────────────────────────────────────┐
│ On Hand:      75  (reduced)             │
│ Committed:     0  (released)            │
│ Available:    75                        │
└─────────────────────────────────────────┘

GL Impact

Account	Debit	Credit	Why?
Accounts Receivable	$1,000		Customer owes you (Asset ↑)
Sales Revenue		$850	Income earned (Revenue ↑)
Sales Tax Payable		$150	Tax owed (Liability ↑)
COGS	$500		Cost of items sold (Expense ↑)
Inventory Asset		$500	Items left warehouse (Asset ↓)

Key Difference from Standard Path: Both fulfillment AND billing happen in one transaction.

---

Cash Sale Conversion

Convert Sales Order directly to Cash Sale for immediate payment.

When to Use

• POS transactions
• Immediate payment received
• No A/R needed

Flow Diagram

CASH SALE CONVERSION
─────────────────────────────────────────────────────────────────

Sales Order #SO-001
│
└──▶ Cash Sale #CS-001 (converted from SO)
     │
     ├── Revenue recognized
     ├── Cash/Bank debited (no A/R)
     ├── Inventory reduced
     └── COGS posted

GL Impact

Account	Debit	Credit	Why?
Cash/Undeposited Funds	$1,000		Money received NOW (Asset ↑)
Sales Revenue		$850	You earned $850 (Revenue ↑)
Sales Tax Payable		$150	Tax owed (Liability ↑)
COGS	$500		Cost of items sold (Expense ↑)
Inventory Asset		$500	Items left warehouse (Asset ↓)

Key Difference: Cash (not A/R) is debited because customer paid immediately.

---

Standalone Invoice (No Sales Order)

Create invoice directly without a Sales Order.

When to Use

• Service-only billing
• Simple transactions without order management
• One-time charges
• Retainer billing
• Quick invoicing without fulfillment tracking

Flow Diagram

STANDALONE INVOICE PATH
─────────────────────────────────────────────────────────────────

    (No Sales Order)
           │
           ▼
    ┌──────────────────┐
    │  INVOICE (New)   │
    │                  │
    │  Created directly│
    │  not from SO     │
    └────────┬─────────┘
             │
             ├── Revenue recognized
             ├── A/R created
             ├── Inventory reduced (if inventory items)
             └── COGS posted (if inventory items)
             │
             ▼
    ┌──────────────────┐
    │ CUSTOMER PAYMENT │
    └──────────────────┘

Inventory Impact

For inventory items:

Before Invoice:
┌─────────────────────────────────────────┐
│ On Hand:     100                        │
│ Committed:     0                        │
│ Available:   100                        │
└─────────────────────────────────────────┘

After Standalone Invoice (25 units):
┌─────────────────────────────────────────┐
│ On Hand:      75  (reduced immediately) │
│ Committed:     0  (no commitment step)  │
│ Available:    75                        │
└─────────────────────────────────────────┘

For service/non-inventory items: No inventory impact.

GL Impact

Account	Debit	Credit	Why?
Accounts Receivable	$1,000		Customer owes you (Asset ↑)
Sales Revenue		$850	Income earned (Revenue ↑)
Sales Tax Payable		$150	Tax owed (Liability ↑)
COGS*	$500		Cost of items sold (Expense ↑)
Inventory Asset*		$500	Items left warehouse (Asset ↓)

*Only for inventory items

Key Point: No Sales Order means no commitment step - inventory reduces directly.

---

Standalone Cash Sale (No Sales Order)

Create cash sale directly without a Sales Order.

When to Use

• POS retail transactions
• Walk-in customers
• Immediate payment without order tracking
• Simple one-time sales

Flow Diagram

STANDALONE CASH SALE PATH
─────────────────────────────────────────────────────────────────

    (No Sales Order)
           │
           ▼
    ┌──────────────────┐
    │   CASH SALE      │
    │   (New)          │
    │                  │
    │   Created direct │
    │   not from SO    │
    └────────┬─────────┘
             │
             ├── Revenue recognized
             ├── Cash received (no A/R)
             ├── Inventory reduced (if inventory items)
             └── COGS posted (if inventory items)
             │
             ▼
    ┌──────────────────┐
    │    COMPLETE      │
    │  (No payment     │
    │   step needed)   │
    └──────────────────┘

GL Impact

Account	Debit	Credit	Why?
Cash/Undeposited Funds	$1,000		Money received (Asset ↑)
Sales Revenue		$850	Income earned (Revenue ↑)
Sales Tax Payable		$150	Tax owed (Liability ↑)
COGS*	$500		Cost of sale (Expense ↑)
Inventory Asset*		$500	Stock reduced (Asset ↓)

*Only for inventory items

Inventory Impact

Same as Standalone Invoice - no commitment step:

Before Cash Sale:
┌─────────────────────────────────────────┐
│ On Hand:     100                        │
│ Committed:     0                        │
│ Available:   100                        │
└─────────────────────────────────────────┘

After Cash Sale (25 units):
┌─────────────────────────────────────────┐
│ On Hand:      75  (reduced immediately) │
│ Committed:     0  (no commitment step)  │
│ Available:    75                        │
└─────────────────────────────────────────┘

---

Comparison: All Paths

Aspect	Standard Path	Invoice Direct	Cash Sale	Standalone Invoice	Standalone Cash Sale
Sales Order	Yes	Yes	Yes	No	No
Fulfillment	Yes	No	No	No	No
Creates A/R	Yes	Yes	No	Yes	No
Payment Timing	Later	Later	Immediate	Later	Immediate
Inv Commitment	Yes	Yes	Yes	No	No

---

Decision Guide

WHICH PATH SHOULD I USE?
─────────────────────────────────────────────────────────────────

Need order tracking or approval workflow?
│
├── YES ──▶ Use Sales Order
│               │
│               ├── Physical goods? → Standard Path (SO → IF → Invoice)
│               ├── Services? → Invoice Direct (skip fulfillment)
│               └── Paid now? → Cash Sale Conversion
│
└── NO ──▶ Standalone transaction
                │
                ├── Paid later (A/R)? → Standalone Invoice
                └── Paid now? → Standalone Cash Sale

---

Next Steps

• Standard Path - Full SO → IF → Invoice flow
• Returns & Credits - Handle customer returns