A Quick Guide to Sales Order Processing: Everything you need to know

Sales processing order is the foundational stone of running a business efficiently.

It is the central system that links customer demand to supply chains, production, and finance teams.

When this process runs efficiently and orders are delivered fast, customers feel happy and satisfied, and cash flows consistently. But what if it doesn’t work that way? You end up facing delays, out-of-stock situations, and loss of revenue. In simple words, facing consequences any growing company cannot afford.

According to a recent study by McKinsey, manual order processing can reduce productivity by up to 30% due to duplicate data entry, human errors, and disconnected systems. Meanwhile, companies that automate their sales order workflows with ERP systems report faster order turnaround times by 25–60% and improved customer satisfaction.

In this guide, we’ll walk through how sales order processing system works, some common challenges, and the role of ERP systems like Microsoft Dynamics 365 Business Central, D365 Finance, and D365 Supply Chain Management, and how you can streamline your entire order-to-cash cycle.

What Is Sales Order Processing?

Sales order processing system, also spelt SOP, is the process of managing the whole lifecycle of any customer order, starting from its order request till the delivery of the product or service and recording the payment.

In simple words, it is not just accepting orders but managing the entire journey of that order, ensuring accuracy, visibility, and timely fulfilment.

In simpler terms, sales order processing ensures:

• Customers receive what they ordered
• The company gets paid correctly
• Operations stay synchronised

It minimises the gap between sales, inventory, finances, and logistics, making it one of the most important processes for maintaining healthy business operations.

How the Sales Order Process Works in ERP

Let’s look at the step-by-step order of the sale process in a typical business:

1. Order Placement

The process begins when a customer places an order through your website, sales rep, email, or a connected platform like Shopify or Amazon.

Each order includes customer details, items requested, quantities, and prices.

2. Order Creation

The sales order is created in your system. In modern businesses, this happens automatically via integrated ERP or CRM systems like Dynamics 365 Business Central or Dynamics 365 CRM.

Manual systems, however, require someone to input the data, which often leads to delays or typos.

3. Order Verification

Before processing, the order must be verified:

• Is the pricing accurate?
• Are products available in stock?
• Is the customer's credit approved?

In ERP systems, this verification happens automatically using built-in rules and data from inventory and finance.

4. Order Fulfilment

Once approved, the order is sent for fulfilment, where items are picked, packed, and shipped.

Systems like Dynamics 365 Supply Chain Management (SCM) can automate warehouse workflows, shipping labels, and delivery tracking.

5. Invoice Generation

After fulfilment, an invoice is automatically created and sent to the customer.

This ensures faster billing and reduces missed invoices, a common issue in manual setups.

6. Payment Collection

Payments can be processed online or through traditional methods.

Integrating ERP systems with payment gateways helps record payments instantly and match them to invoices.

7. Reporting and Analysis

The final step is tracking performance, like how many orders were processed, delivery timelines, payment delays, or issues.

Analytics tools within Dynamics 365 provide real-time dashboards for decision-making.

Common Sales Order Challenges

Some common challenges even established companies face in order processing. Here are some of the most commonly reported:

1. Manual Data Entry

Are your employees still using spreadsheets or paper-based orders? You’re not alone — but it’s not safe. Studies show human error rates in manual order entry exceed 3–5%, causing delays and customer dissatisfaction.

2. Poor Inventory Visibility

When stock data isn’t updated in real time, your team may oversell or understock. This leads to cancelled orders, lost opportunities and even unhappy customers.

3. Delayed Approvals

When automation is not used, every order needs manual verification for pricing, credit, or inventory, which adds up to unnecessary wait time.

4. Lack of Integration

When sales, finance, and warehouse systems are not interconnected to each other, teams spend hours reconciling data. One small mismatch can ripple through the entire process.

5. Slow Invoicing

Late or inconsistent invoicing affects cash flow. According to the UK Federation of Small Businesses, over 50% of SMEs face payment delays due to poor invoicing processes.

6. Limited Reporting

When data is not interconnected, it becomes difficult to view performance metrics such as average processing time or fulfilment accuracy in real time.

These challenges often appear due to outdated systems or siloed software. In such situations, ERP solutions can be an effective solution.

The Role of ERPs in Sales Order Processing

An ERP system, also known as Enterprise Resource Planning, acts as the backbone of modern sales order processing.

Instead of using different tools for finance, sales, and inventory, the ERP system connects everything in one central platform and provides improved visibility, accuracy, and efficiency.

Let’s explore how ERP systems, such as Microsoft Dynamics 365 Business Central, Dynamics 365 Finance, and Dynamics 365 SCM, simplify the order processing workflow:

1. Centralised Data

All teams work with a single source of data, from order details to inventory status and billing. This eliminates duplicate data entry and ensures accuracy.

2. Real-Time Inventory Updates

Stock levels update automatically as soon as an order is placed or fulfilled, preventing overselling or backorders.

3. Automated Workflow

You can set up automated order approvals, invoice creation, and shipment notifications, reducing manual intervention.

4. Integrated Financials

Since ERP integrates finance and operations, invoices, payments, and tax calculations are handled seamlessly.

5. Customer Communication

Order confirmations, shipping updates, and invoices are automatically shared with customers, improving transparency and satisfaction.

6. Reporting & Analytics

Built-in dashboards show order volumes, sales trends, and delivery performance, helping businesses plan smarter.

Implementation: How to Get Started with ERP-Based Sales Order Processing

Switching to an ERP system may sound complicated, but when you follow the right approach, it can be smooth and easy.

Here’s what the typical implementation process looks like:

1. Assessment

Understand your current order processing workflow. Identify where delays, errors, or inefficiencies occur.

2. Solution Design

Your ERP partner (like Dynamics Square UK) will map your workflow and design a solution that fits your business size and goals.

3. Data Migration

Existing useful data, such as customer, product, and order details, is securely transferred into the new ERP system.

4. Configuration

Dashboards, workflows, and approval processes are set up to match your operations.

5. Training & Testing

Teams are trained on how to use the new system, whereas User testing ensures every function works as expected.

6. Go-Live & Support

The system goes live even after that; ongoing support ensures you receive timely updates, troubleshooting, and future enhancements.

Most small-to-mid-sized businesses go live with Dynamics 365 Business Central within 4–8 weeks, depending on complexity.

Benefits of Sales Order Processing with ERP

Once your ERP system is implemented and starts running, you’ll start noticing the difference after a short time, such as faster operations, fewer errors, and better control over cash flow. Let’s look at the benefits of sales order processing with ERP and how it simplifies everyday work and improves your overall performance.

1. Faster Order Turnaround

The ERP system connects the order process at each step from sales entry to shipping and invoicing. It enables fewer delays and smoother coordination between departments. After ERP implementation, businesses report process time improvement of up to 60%, which means you get more time to serve customers faster and more efficiently.

2. Fewer Manual Errors

With Sales Order Processing with ERP, everything runs through a single connected system; that means you don’t need to re-enter the same information repeatedly. This process reduces manual errors by nearly 90% and leads to more accurate orders, invoices, and reports and fewer customer complaints.

3. Improved Delivery Performance

With its real-time visibility into stock, shipments, and supplier data, teams can plan and fulfil orders more effectively. Businesses using ERP systems often report 30–50% better on-time delivery rates, simply because they are no longer relying on guesswork about what's in stock or what’s due next.

4. Better Team Visibility and Collaboration

Every team works on the same updated information, be it sales, finance, inventory, or logistics. When data isn’t scattered across spreadsheets or different software, it becomes easier and faster to make decisions, track progress, and keep communication clear across teams.

5. Happier Customers

Customers get faster order confirmations, fewer delivery errors, and prompt communication, which makes them feel confident in your service. Many companies using systems like Dynamics 365 report higher retention rates and improved customer satisfaction scores after automation.

6. Stronger Cash Flow

ERP helps keep your finances healthy by automating invoices and tracking payments in real time. Businesses that switch to ERP often witness a 25–35% cash flow improvement, as they get paid faster and reduce the number of overdue accounts.

7. Real ROI That You Can Measure

These benefits don’t just sound good but ultimately translate into real value. A Nucleus Research study found that companies implementing ERP solutions achieve an average ROI of 250% within two years, driven by better productivity, automation, and reduced operational expenses.

How Microsoft Dynamics 365 Streamlines the Process

1. Dynamics 365 Business Central

It is the best choice for small and medium-sized businesses. Microsoft Business Central automates the entire sales order process, from quote to cash.

It connects everything—finance, inventory, and sales data—and enables teams to gain real-time insights and reduce back-office work.

2. Dynamics 365 Finance

Dynamics 365 Finance is a great fit for larger organisations that require complex financial structures. D365 Finance integrates various finance modules such as billing, revenue recognition, and compliance across multiple entities or geographies.

3. Dynamics 365 Supply Chain Management (SCM)

Dynamics 365 Supply Chain Management handles order fulfilment, warehousing, and logistics. It also ensures orders move quickly through the supply chain while keeping costs optimised.

Together, these Dynamics 365 applications create a connected, end-to-end order management system, giving you speed, visibility, and accuracy at every stage of the process.

Real-World Example

A UK-based wholesale distributor was facing issues with inconsistent data and manual sales order tracking. It was reducing the overall speed of sales order processing, and because of that, orders used to take days to process, and customers received incorrect invoices repeatedly.

After they implemented Dynamics 365 ERP for wholesale distribution, they integrated their finance, inventory, and CRM data.

The results changed drastically after 6 months:

• Order processing time got reduced by 45%
• Manual errors also got reduced by 80%
• Invoicing delays almost disappeared
• Customer satisfaction scores rose by 25%

After implementing automation, it not only improved operations, but it also freed staff to focus on new business opportunities.

When to Consider Upgrading Your Sales Order Processing

Your system is ready to modernise if:

• Your work still relies heavily on manual entry or spreadsheets
• Your customers frequently complain about delays or wrong invoices
• Your finance and warehouse teams use different tools
• You can’t get real-time views into orders or inventory
• Your business is scaling; you are adding new products, customers, or regions

If any of these seem similar to your current situation, ERP integration is the right solution.

Final Thoughts

Sales order processing may sound like a routine task, but it is more than that, as it plays an important role in the growth of your business. Even things like order delay, mismatch, or error affect your business revenue, reputation, and relationships.

With ERP systems like Microsoft Dynamics 365 Business Central, Finance, and SCM, businesses can turn order issues into a smooth, automated, and insight-driven operation.

These tools are not just limited to helping you manage sales orders but also growing your business more smartly and with better visibility.

Contact Dynamics Square UK today to get started; they are a trusted Microsoft Solutions Partner. Their team can assess your sales order processing system and then set up and help you choose and implement the right Dynamics 365 solution based on your business needs!

FAQs

1. What is sales order processing?

Sales order processing refers to the complete process of receiving, managing, fulfilling, and invoicing customer orders, from order to delivery.

2. How does ERP help with order processing?

ERP systems integrate sales, finance, and inventory modules; therefore, they eliminate manual data entry and speed up the process.

3. Which Dynamics 365 solution supports sales order processing?

Dynamics 365 Business Central, Dynamics 365 Finance, and Dynamics 365 Supply Chain Management all handle different aspects of sales order processing based on business size and need.

4. Can ERP reduce manual work?

Yes, with automated workflows, data syncing, and integrated reporting, manual effort and errors can be reduced.

5. How long does ERP implementation take?

Most businesses go live in 4–8 weeks; others may take more, which again depends on complexity and customisation.

6. What industries benefit most?

Retail, manufacturing, distribution, and service-based companies get the most benefit from ERP implementation for sales order processing.