Standard Sales Path

The most common sales flow: Sales Order → Item Fulfillment → Invoice → Customer Payment

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Flow Diagram

STANDARD SALES PATH
─────────────────────────────────────────────────────────────────

┌─────────────────┐     ┌─────────────────┐     ┌─────────────────┐     ┌─────────────────┐
│  SALES ORDER    │     │ ITEM FULFILLMENT│     │    INVOICE      │     │    PAYMENT      │
│                 │     │                 │     │                 │     │                 │
│  GL: None       │ ──▶ │  GL: None*      │ ──▶ │  GL: Yes        │ ──▶ │  GL: Yes        │
│  Inv: Commits   │     │  Inv: Reduces   │     │  Inv: None      │     │  Inv: None      │
└─────────────────┘     └─────────────────┘     └─────────────────┘     └─────────────────┘

* GL at Fulfillment only if "Post COGS at Fulfillment" is enabled

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Stage 1: Sales Order Creation

What Happens

Action	Result
Create SO	Record saved with status "Pending Fulfillment"
Items added	Quantity committed against inventory
Pricing applied	Extended amount calculated
Taxes calculated	Tax lines created if applicable

Inventory Impact

INVENTORY COMMITMENT ON SALES ORDER
─────────────────────────────────────────────────────────────────

Before SO:
┌─────────────────────────────────────────┐
│ Item: Widget-001                        │
│ On Hand:     100                        │
│ Committed:     0                        │
│ Available:   100                        │
└─────────────────────────────────────────┘

After SO (Qty: 25):
┌─────────────────────────────────────────┐
│ Item: Widget-001                        │
│ On Hand:     100  (unchanged)           │
│ Committed:    25  (reserved for SO)     │
│ Available:    75  (100 - 25)            │
└─────────────────────────────────────────┘

GL Impact

None - Sales Order does not post to General Ledger.

Sales Order Statuses

Status	Meaning
Pending Approval	Needs approval workflow
Pending Fulfillment	Ready to ship
Pending Billing	Shipped, awaiting invoice
Pending Billing/Partially Fulfilled	Partial ship, more to fulfill
Billed	Fully invoiced
Closed	Manually closed

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Stage 2: Item Fulfillment

What Happens

Action	Result
Create IF from SO	Fulfillment record linked to SO
Confirm quantities	Shipping quantities finalized
Save IF	Inventory physically reduced
SO status updates	Changes to "Pending Billing"

Creating Item Fulfillment

FULFILLMENT CREATION
─────────────────────────────────────────────────────────────────

Sales Order #SO-001
├── Line 1: Widget-A (Qty: 10)  ──▶  Fulfill: 10 ✓
├── Line 2: Widget-B (Qty: 5)   ──▶  Fulfill: 5 ✓
└── Line 3: Widget-C (Qty: 20)  ──▶  Fulfill: 15 (partial)

Result: Item Fulfillment #IF-001 created
        SO Status: Pending Billing/Partially Fulfilled

Inventory Impact

INVENTORY AFTER FULFILLMENT
─────────────────────────────────────────────────────────────────

Before Fulfillment (SO committed 25):
┌─────────────────────────────────────────┐
│ On Hand:     100                        │
│ Committed:    25                        │
│ Available:    75                        │
└─────────────────────────────────────────┘

After Fulfillment (25 units shipped):
┌─────────────────────────────────────────┐
│ On Hand:      75  (reduced by 25)       │
│ Committed:     0  (released)            │
│ Available:    75  (same as On Hand)     │
└─────────────────────────────────────────┘

GL Impact

Typically None - Standard behavior posts COGS at invoice time.

Exception: If using Standard Costing with "Post Inventory Cost to COGS at Fulfillment":

Account	Debit	Credit	Why?
COGS	$500		Expense recognized early (Expense ↑)
Inventory Asset		$500	Goods left warehouse (Asset ↓)

WHY POST COGS AT FULFILLMENT?
─────────────────────────────────────────────────────────────────

Standard (default): COGS posts at Invoice
  - Revenue and cost match in same period
  - Most common approach

Exception: COGS at Fulfillment
  - Cost recognized when goods ship
  - Used when revenue recognition is delayed
  - Inventory reduced immediately

Partial Fulfillment

PARTIAL FULFILLMENT SCENARIO
─────────────────────────────────────────────────────────────────

SO #001: 100 units ordered
    │
    ├── IF #001: 40 units shipped
    │   └── SO Status: Pending Billing/Partially Fulfilled
    │
    ├── IF #002: 35 units shipped
    │   └── SO Status: Pending Billing/Partially Fulfilled
    │
    └── IF #003: 25 units shipped (final)
        └── SO Status: Pending Billing (fully fulfilled)

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Stage 3: Invoice

What Happens

Action	Result
Bill from SO	Invoice linked to SO and IF
Revenue recognized	GL entries posted
A/R created	Customer owes money
SO status updates	Changes to "Billed"

GL Impact

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

*COGS posts at invoice if not posted at fulfillment

GL ENTRY BREAKDOWN - INVOICE
─────────────────────────────────────────────────────────────────

REVENUE SIDE (what you earned):
  A/R (Asset)                    $1,000  Dr  ← Customer owes you
  Revenue                                 $850   Cr  ← Money earned
  Tax Payable (Liability)                 $150   Cr  ← Tax owed

COST SIDE (what it cost you):
  COGS (Expense)                 $500   Dr  ← Expense recognized
  Inventory (Asset)                       $500   Cr  ← Stock reduced

Total Debits:  $1,500
Total Credits: $1,500  ✓ Balanced!

Invoice Creation Options

INVOICE CREATION OPTIONS
─────────────────────────────────────────────────────────────────

Option 1: Invoice all fulfilled items
SO #001 → IF #001 (40 units) ─┐
       → IF #002 (35 units) ─┼──▶ Invoice #INV-001 (75 units)
                             │
                             └── Partial billing possible

Option 2: Invoice per fulfillment
SO #001 → IF #001 (40 units) ──▶ Invoice #INV-001 (40 units)
       → IF #002 (35 units) ──▶ Invoice #INV-002 (35 units)

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Stage 4: Customer Payment

What Happens

Action	Result
Apply payment to invoice	A/R reduced
Deposit created	Bank account increased
Invoice status	Changes to "Paid In Full"

GL Impact

Step 1: Customer Payment Received

Account	Debit	Credit	Why?
Undeposited Funds	$1,000		Money received, waiting for deposit (Asset ↑)
Accounts Receivable		$1,000	Customer no longer owes you (Asset ↓)

PAYMENT GL EXPLAINED
─────────────────────────────────────────────────────────────────

Before Payment:
  A/R = $1,000 (customer owes you)
  Cash = $0

After Payment:
  A/R = $0 (debt cleared)
  Undeposited Funds = $1,000 (money in hand, not yet in bank)

Think: Customer's IOU → Actual money in your hands

Step 2: When Deposit is Made (Bank Deposit record)

Account	Debit	Credit	Why?
Bank Account	$1,000		Money in your bank (Asset ↑)
Undeposited Funds		$1,000	No longer holding cash (Asset ↓)

Why Two Steps? You might receive multiple checks throughout the day and deposit them together.

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Complete Timeline

STANDARD PATH TIMELINE
─────────────────────────────────────────────────────────────────

Day 1: Sales Order Created
        └── GL: Nothing posted
            Inv: 25 units committed

Day 2: Item Fulfillment Saved
        └── GL: Nothing posted (standard costing)
            Inv: 25 units shipped (On Hand reduced)

Day 3: Invoice Created
        └── GL: Revenue + A/R + COGS + Inventory posted
            Inv: No change (already shipped)

Day 10: Customer Payment Received
        └── GL: Undeposited Funds + A/R cleared
            Inv: No change

Day 10: Bank Deposit Made
        └── GL: Bank + Undeposited Funds cleared
            Inv: No change

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Related Records

Record	Relationship
Customer	SO.entity field
Item	SO line items
Location	Source of inventory
Shipping Item	Shipping method
Tax Code	Tax calculation
Terms	Payment terms
Sales Rep	Commission tracking

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Next Steps

• Direct Paths - Skip fulfillment or Sales Order
• Returns & Credits - Handle customer returns