Saturday, November 27, 2010

QuickBooks: The Real Amount of Open Sales Orders

A QuickBooks Pro client asked: “I noticed one day that when I ran an Open Sales Order by Customer and then an Open Sales Order by Item Report, the bottom line was different. Why are they different, and which is correct?”

In a way, each of these open amounts can be “correct,” depending on which perspective you need. However, there is only one way to show the “real” amount – the amount you would charge your customers if you shipped everything that is currently on order.

Let’s talk about each report:

Open Sales Orders by Customer
The Open Sales Order by Customer report shows one line for each Sales Order and lists the Sales Order Number and Open amount. The open amount on this report is the total Sales Order amount, not the amount that is currently open. In other words, if the Sales Order is partially shipped due to backordered quantities; the open balance on this report includes the partially shipped quantities.

You use this report mainly to track which Customers have open orders so you can manage your Customer relationships.

Open Sales Orders by Item
This report shows a separate line Item for each line of the Sales Order form. If a line on a sales form is fully shipped, the line does not show on this report. However, if a line is partially shipped and has backordered quantities, the line shows the total including these shipped Items.

As a result, the total on the Open Sales Orders by Item report will be the same or lower than the amount on the Sales Order by Customer report since the Sales Order by Customer report includes all of the lines on open Sales Orders, even those that are fully shipped.

The “Real” Open Sales Orders Report
If you add the Open Balance column to the Open Sales Orders by Customer or Open Sales Orders by Item reports, this amount is the “true” open amount in that lines that are completely fulfilled and the quantities shipped from Sales Orders lines that are partially fulfilled are not included in this balance.

So, it is best to add this column to the Sales by Customer and Sales by Item reports, memorize the reports and add the reports to the Icon Bar for regular use.

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