eCommerce is all about sales transactions. No matter what marketing, promotion, polls, product review, etc. you are doing in your eCommerce, but all activities are done only to retain an increase sales at a stable pace. Usually eCommerce follows Sales Order and Invoice for simplicity and this is only used for Sales Operations, so usually do not require much complexity in recording transactions. But it’s very common that any eCommerce company uses Back Office Systems, Accounting System/ERP to capture and process these transactions. Transactional Systems follow different Order and Invoice types, so what you should record against an eCommerce transaction in your Accounting/ERP system?
Here we have tried to mention the Order and Invoice types against eCommerce Transactions which you can follow in your business. This is based on our experience and expertise in eCommerce after analyzing more than 120 eCommerce Businesses.
This is not very efficient approach to capture Web Sales Order as Sales Quotation in your back office ERP/Accounting System, still this is used in some B2B eCommerce Companies. As we know Sales Quotation price can be changed based on negotiation with the Customer (Company in this case as this is B2B), so any ‘Order Edit’ extension is required in eCommerce to edit the Sales Order and change the pricing.
This is a standard practice to capture Web Sales Order as Draft Sales Order in Back Office ERP/Accounting System. Usually the business process where the Web Order need to validate, follows this Scenario. Order validation usually happens for payment mode like Cash On Delivery or Post Authorization of Credit Cards. Businesses which operate in ‘Make to Order’ mode also follows this scenario where the items are manufactured once the Order been placed.
This is the most common scenario to capture Web Sales Order as Sales Order in Back Office ERP/Accounting System. This is mostly followed in ‘Order to Make’ mode where items are already enlisted and available for purchase. Also the payment usually happen through Payment Gateway which follows Pre Authorization of Credit Cards. Rapid Delivery and quick order processing is the key, so Sales Order is created in Back Office System for Quick Processing.
A/R Invoice is generated in Back Office System usually against Manual Payments like Cash On Delivery or Post Authorization of Credit Card Payment Mode. First the Order is processed for shipment and then this type of Invoice is generated to be sent to Consumers.
A/R Reserve Invoice:
A/R Reserve Invoice is one of the most important entity for eCommerce Transactions capturing within Back Office ERP/Accounting System. This type of Invoice generally used against Online Payment through Payment Gateway with Pre Authorization of Credit Cards. Sales Order and Invoice generated in eCommerce against successful Online Payment, this web invoice can be used as a reference and we should create A/R Reserve Invoice in back office system. A/R Reserve Invoice can be used for Quick Order Processing and Shipment through Back Office ERP/Accounting system.
A/R Down Payment Invoice:
This Invoice Type is usually used against Partial Payments in eCommerce. Partial Payments are very common for B2B Business. Partial Payment Invoice created in eCommerce can be captured as A/R Down Payment Invoice in the Back Office ERP/Accounting system.
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