Learn how to manage the complete order processing cycle in TallyPrime, from creating Purchase Orders and Sales Orders to recording goods receipts, generating invoices, and tracking pending orders. Includes step-by-step instructions, practical examples, and useful tips for efficient inventory and order management.
Order Processing in TallyPrime: Complete Guide from Purchase Order to Sales Order
Managing orders is an essential part of running any trading, wholesale, retail, or manufacturing business. When a customer places an order, you need to check product availability, arrange purchases if stock is insufficient, receive goods from suppliers, and finally deliver the products to customers.
Handling all these activities manually can become confusing, especially when you manage multiple suppliers and customers. This is where Order Processing in TallyPrime becomes useful.
TallyPrime provides dedicated Purchase Order and Sales Order features that help businesses manage the complete order cycle. You can record purchase requirements, track supplier deliveries, manage customer orders, monitor pending quantities, and connect orders with actual purchase and sales transactions.
In this guide, you will learn how order processing works in TallyPrime, how to create Purchase Orders and Sales Orders, how to track pending orders, and how to manage the complete process with practical examples.
What Is Order Processing in TallyPrime?
Order processing is the process of recording, tracking, and completing orders between a business, its suppliers, and its customers.
TallyPrime supports two important types of orders:
Purchase Order: An order placed by your business with a supplier to purchase goods or services.
Sales Order: An order received from a customer for products or services your business will supply.
These two features help you maintain a clear record of what you need to purchase and what you have committed to deliver.
For example, suppose you run a wholesale electronics business. A customer orders 100 keyboards, but your current stock is only 40 units.
You can create a Sales Order for 100 keyboards and then place a Purchase Order with your supplier for the additional 60 units.
After receiving the goods, you can complete the customer's order through a Sales Voucher.
This creates a connected workflow between purchasing, inventory management, and sales.
How the Complete Order Processing Cycle Works
The order processing cycle generally starts when a customer requests products and ends when the goods are delivered and the transaction is recorded.
Here is how the process works in TallyPrime:
| Step | Activity | Purpose |
|---|---|---|
| 1 | Receive Customer Order | Record the customer's requirement |
| 2 | Create Sales Order | Enter the products and quantities to be supplied |
| 3 | Check Stock Availability | Identify available and required stock |
| 4 | Create Purchase Order | Order additional goods from suppliers |
| 5 | Receive Goods | Record the goods received from the supplier |
| 6 | Update Inventory | Increase stock after receiving goods |
| 7 | Create Sales Invoice | Record the actual sale and delivery |
| 8 | Track Pending Orders | Check outstanding purchase and sales quantities |
Important: TallyPrime does not automatically create every transaction in this sequence. You need to record the relevant vouchers and link them through the appropriate order references.
Understanding Purchase Orders in TallyPrime
A Purchase Order is a document your business creates when it wants to purchase goods from a supplier.
It records important details such as:
Supplier name
Order date
Expected delivery date
Product or stock item
Order quantity
Rate and amount
Delivery terms
Additional charges, where applicable
A Purchase Order helps you communicate your requirements clearly to suppliers and track the goods you are expecting.
For example, suppose your business needs the following products:
| Product | Required Quantity | Rate | Total |
|---|---|---|---|
| Keyboard | 100 | ₹500 | ₹50,000 |
| Mouse | 150 | ₹250 | ₹37,500 |
| Monitor | 20 | ₹5,000 | ₹1,00,000 |
| Total | ₹1,87,500 |
You can enter these details in a Purchase Order and share the order information with your supplier.
How to Enable Purchase Order Processing in TallyPrime
Before creating a Purchase Order, check whether the relevant order processing feature is enabled.
Follow these steps:
Open your company in TallyPrime.
Press F11 (Features).
Locate the inventory-related settings.
Enable the Purchase Order Processing option, if available in your version.
Save the configuration.
Depending on your TallyPrime release and company configuration, some inventory-related options may appear under different sections.
How to Create a Purchase Order in TallyPrime
Once the required feature is enabled, you can create your first Purchase Order.
Follow this procedure:
Step 1: Open the Purchase Order Voucher
Open Gateway of Tally.
Select Vouchers.
Press F10 (Other Vouchers).
Select Purchase Order.
Alternatively, use the voucher navigation or search option to locate the Purchase Order voucher.
Step 2: Select the Supplier
Choose the supplier ledger from whom you want to purchase goods.
If the supplier does not exist, create a new ledger under the Sundry Creditors group.
Step 3: Enter Order Details
Enter the following information:
Order date
Supplier details
Reference number
Expected delivery date
Stock item
Required quantity
Purchase rate
Step 4: Enter Product Details
Select the stock items you want to purchase.
For example:
| Stock Item | Quantity | Rate |
|---|---|---|
| Laptop | 10 Nos | ₹45,000 |
| Keyboard | 20 Nos | ₹500 |
| Mouse | 20 Nos | ₹250 |
TallyPrime calculates the item amounts based on the quantities and rates entered.
Step 5: Save the Purchase Order
Verify the supplier, quantities, rates, and other details.
Press Ctrl + A to save the voucher.
Your Purchase Order is now recorded in TallyPrime.
Understanding Sales Orders in TallyPrime
A Sales Order is a document created when a customer confirms an intention to purchase products or services from your business.
It helps you record the customer's requirements before generating the actual sales invoice.
A Sales Order generally includes:
Customer name
Order number
Order date
Delivery date
Stock item
Quantity ordered
Selling rate
Total order value
Delivery details
For example, a customer orders 50 office chairs at ₹3,000 each.
The total order value will be:
50 × ₹3,000 = ₹1,50,000.
You can record this transaction as a Sales Order without immediately recording it as a completed sale.
This is particularly useful when goods will be delivered later or in multiple batches.
How to Enable Sales Order Processing in TallyPrime
Before creating a Sales Order, check the relevant inventory configuration.
Follow these steps:
Open Gateway of Tally.
Press F11 (Features).
Navigate to the inventory-related configuration.
Enable Sales Order Processing, if required.
Save the settings.
The exact configuration options may vary depending on your TallyPrime version.
How to Create a Sales Order in TallyPrime
Follow these steps to record a customer order.
Step 1: Open the Sales Order Voucher
Go to Gateway of Tally.
Select Vouchers.
Press F10 (Other Vouchers).
Choose Sales Order.
Step 2: Select the Customer
Choose the customer ledger who has placed the order.
If the customer is new, create a ledger under Sundry Debtors.
Step 3: Enter the Order Information
Enter the order date, reference number, and expected delivery date, where applicable.
Step 4: Select Stock Items
Choose the products ordered by the customer.
For example:
| Product | Quantity | Selling Rate | Amount |
|---|---|---|---|
| Office Chair | 50 | ₹3,000 | ₹1,50,000 |
| Office Table | 10 | ₹7,000 | ₹70,000 |
| Total | ₹2,20,000 |
Step 5: Save the Sales Order
Check all product details and save the voucher using Ctrl + A.
Your customer's order is now recorded.
How to Create a Purchase Order Against a Sales Order
One of the most useful parts of order processing is arranging purchases to fulfil customer requirements.
Suppose a customer orders 100 units of a product, but your business has only 40 units available.
You need to purchase the remaining 60 units.
Here is a practical example:
| Particulars | Quantity |
|---|---|
| Customer Order | 100 |
| Available Stock | 40 |
| Additional Quantity Required | 60 |
| Supplier Purchase Order | 60 |
Create a Purchase Order for the required quantity and select the supplier.
You can maintain the customer's Sales Order and supplier's Purchase Order separately, ensuring that both sides of the transaction are properly recorded.
Practical tip: Use meaningful order reference numbers so you can identify which customer requirement a particular purchase is intended to fulfil.
How to Record Goods Received Against a Purchase Order
Creating a Purchase Order does not increase your actual stock.
Your inventory should be updated when the goods are physically received and the appropriate receipt transaction is recorded.
Suppose you ordered 100 keyboards from a supplier, but the supplier delivered only 70 units.
You should record the actual quantity received rather than treating the entire order as completed.
Follow these steps:
Open Gateway of Tally.
Go to Vouchers.
Open the Receipt Note voucher, if you use the separate goods receipt process.
Select the supplier.
Choose the relevant Purchase Order reference.
Enter the quantity received.
Verify the stock item and other details.
Save the voucher.
If your business does not use a separate Receipt Note, you can record the goods through a Purchase voucher using the appropriate Purchase Order reference.
The exact workflow depends on your inventory configuration and whether you maintain separate goods receipt records.
How to Create a Purchase Invoice Against a Purchase Order
After receiving goods, you can record the supplier's actual invoice.
For example:
Purchase Order: 100 keyboards
Goods received: 70 keyboards
Supplier invoice: 70 keyboards
Follow these steps:
Open the Purchase voucher.
Select the supplier ledger.
Enter the supplier invoice number and date.
Select the relevant Purchase Order reference.
Enter the received quantity and applicable rates.
Verify taxes and additional charges.
Save the voucher.
TallyPrime can use the order reference to connect the purchase transaction with the original order.
If the supplier delivers the remaining 30 keyboards later, you can record the subsequent receipt and purchase invoice against the outstanding order, as appropriate.
How to Create a Sales Invoice Against a Sales Order
After arranging the required stock, you can complete the customer's order by creating a Sales Invoice.
Suppose your customer ordered 100 keyboards at ₹700 each.
You have received the required stock and are ready to deliver 100 units.
Follow these steps:
Open Gateway of Tally.
Select Vouchers.
Open the Sales voucher.
Select the customer ledger.
Enter the invoice date.
Select the relevant Sales Order reference.
Choose the stock item.
Enter the quantity being delivered.
Verify the selling rate and applicable taxes.
Save the Sales voucher.
The invoice records the actual sale, while the Sales Order helps you track the original customer requirement.
If you deliver only 60 keyboards initially, record the quantity actually delivered. The remaining 40 units can be supplied later against the outstanding order.
How to Track Pending Purchase and Sales Orders
Recording orders is only part of the process. You also need to monitor which orders have been completed and which are still pending.
TallyPrime provides order-related reports that help you review outstanding quantities and order status.
Depending on your version and configuration, look for reports such as:
Purchase Order Outstanding
Sales Order Outstanding
Purchase Order Summary
Sales Order Summary
Stock Summary
You can use these reports to identify:
Orders awaiting supplier delivery
Partially received purchase orders
Customer orders awaiting dispatch
Partially completed sales orders
Outstanding product quantities
For example:
| Particulars | Quantity |
|---|---|
| Customer Order | 100 |
| Delivered Quantity | 60 |
| Pending Delivery | 40 |
This makes it easier to plan deliveries and follow up with customers.
Difference Between Purchase Order and Sales Order in TallyPrime
Although both vouchers are used for order management, their purposes are different.
| Basis | Purchase Order | Sales Order |
|---|---|---|
| Created For | Supplier | Customer |
| Purpose | Purchase goods | Sell goods |
| Business Activity | Procurement | Sales |
| Created By | Buyer | Seller |
| Stock Impact | Does not directly increase stock | Does not directly reduce stock |
| Related Voucher | Purchase / Receipt Note | Sales |
| Main Benefit | Tracks expected purchases | Tracks customer commitments |
Both vouchers help businesses manage inventory requirements without treating an unfulfilled order as a completed purchase or sale.
Practical Example: Complete Order Processing Cycle in TallyPrime
Let's understand the complete process through a business example.
Suppose ABC Electronics receives an order from a customer for 100 computer monitors.
The selling price is ₹8,000 per monitor.
However, ABC Electronics currently has only 30 monitors in stock.
The business needs another 70 monitors from its supplier.
Customer Order Details
| Particulars | Details |
|---|---|
| Customer Order | 100 Monitors |
| Selling Price | ₹8,000 |
| Total Sales Order Value | ₹8,00,000 |
| Available Stock | 30 |
| Additional Stock Required | 70 |
Purchase Details
ABC Electronics creates a Purchase Order for 70 monitors at ₹6,500 each.
| Particulars | Amount |
|---|---|
| Purchase Quantity | 70 |
| Purchase Rate | ₹6,500 |
| Total Purchase Order | ₹4,55,000 |
After receiving the goods, the business records the receipt and supplier invoice.
The available inventory is now sufficient to fulfil the customer order.
Sales Details
ABC Electronics creates a Sales Invoice for 100 monitors.
| Particulars | Amount |
|---|---|
| Sales Quantity | 100 |
| Selling Rate | ₹8,000 |
| Total Sales | ₹8,00,000 |
The complete order cycle is now recorded:
Customer places an order for 100 monitors.
ABC Electronics creates a Sales Order.
The business checks available stock.
A Purchase Order is created for 70 monitors.
Goods are received from the supplier.
The supplier's Purchase Invoice is recorded.
The customer receives the monitors.
The Sales Invoice is generated.
This process provides a clear record of the customer's requirement, the supplier's delivery, and the final sale.
Note: The example excludes GST, freight, discounts, and other adjustments to keep the calculations simple.
Common Mistakes to Avoid During Order Processing
Even a small mistake in order management can create problems with stock availability, supplier payments, and customer deliveries.
Keep the following points in mind:
Creating a Purchase Order Without Checking Stock
Always check available inventory before placing an order. Otherwise, you may purchase more goods than your business actually needs.
Recording the Full Order Instead of the Delivered Quantity
If a supplier delivers 70 units out of 100, record the actual quantity received. Do not mark the complete order as received.
Creating a Sales Invoice Without Checking Delivery
Record the quantity actually supplied to the customer. This is especially important when deliveries happen in multiple batches.
Not Using Order References
Use the relevant Purchase Order and Sales Order references when recording subsequent transactions. This makes outstanding order tracking easier.
Ignoring Pending Order Reports
Regularly review outstanding orders to avoid delayed deliveries and unnecessary purchases.
Best Practices for Managing Orders in TallyPrime
For smoother business operations, follow these practical recommendations:
Create Purchase Orders before placing significant supplier orders.
Record customer commitments through Sales Orders.
Maintain accurate stock item names and units of measurement.
Enter expected delivery dates wherever applicable.
Use separate Receipt Notes if your business needs detailed goods receipt tracking.
Match supplier invoices with the relevant Purchase Orders.
Record partial deliveries accurately.
Review outstanding order reports regularly.
Keep supplier and customer ledgers updated.
Reconcile physical stock with TallyPrime inventory periodically.
These practices help reduce manual errors and improve coordination between purchasing, inventory, and sales departments.
Frequently Asked Questions (FAQs)
1. What is Order Processing in TallyPrime?
Order Processing is a feature that helps businesses record and track Purchase Orders and Sales Orders.
2. Does a Purchase Order increase stock in TallyPrime?
No. A Purchase Order alone does not increase actual inventory. Stock is updated through the appropriate receipt or purchase transaction.
3. Does a Sales Order reduce stock?
No. A Sales Order records a customer's requirement but does not directly reduce available inventory.
4. Can I create a Sales Invoice against a Sales Order?
Yes. You can use the relevant Sales Order reference while creating a Sales voucher.
5. Can I track partially completed orders in TallyPrime?
Yes. Order outstanding reports help you monitor pending quantities for purchase and sales orders, subject to the voucher references and configuration used.
Final Thoughts
Order Processing in TallyPrime makes it easier to manage purchasing requirements, customer commitments, supplier deliveries, and sales transactions.
By using Purchase Orders and Sales Orders correctly, you can maintain better control over inventory and avoid confusion between goods ordered, goods received, and goods delivered.
Whether you operate a small trading business, wholesale shop, distribution company, or manufacturing unit, understanding the complete order processing cycle can help you manage daily operations more efficiently.
Start by recording your supplier and customer orders properly, linking them with the relevant purchase and sales transactions, and reviewing outstanding orders regularly. This simple approach can make your business records more organised and reliable.
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