Understanding Sales Order Types
In SAP Sales and Distribution (SD), Sales Orders are at the heart of the order-to-cash cycle. A sales order is a legally binding agreement between a seller and a customer for the sale and delivery of goods or services. From creation to billing, it drives logistics, accounting, and customer interactions.
But not all sales orders are the same. Some customers need routine deliveries, some want immediate fulfillment, some buy over the counter, while others return goods. To handle these varied needs, SAP provides different Sales Order Types, each with its own process flow, accounting impact, and business significance.
This blog explores the main sales order types in SAP SD, explaining their importance, process flow, and real-world scenarios.
Purpose of Sales Order Types
Sales order types in SAP SD allow businesses to:
Differentiate between various sales scenarios (standard sales, rush deliveries, cash transactions, and returns).
Control delivery and billing behavior automatically.
Map accounting entries correctly based on the nature of the transaction.
Provide flexibility and efficiency in handling diverse customer requirements.
Key Sales Order Types in SAP SD
1. Standard Order (OR)
Definition:
The most common order type, used for routine sales transactions. It triggers the normal order-to-cash cycle. A sales order is a legally binding agreement between a seller and a customer for the sale and delivery of goods or services. It initiates the order-to-cash cycle, which includes everything from order creation to invoicing and payment collection.
Process Flow:
Create Sales Order (VA01) → Enter order type OR.
Delivery Creation (VL01N) → Delivery is created based on the requested delivery date.
Picking & PGI (VL02N) → Goods are picked and packed, and the goods issue is posted.
Billing (VF01) → Invoice is generated.
Accounting Entries:
At PGI:
Dr: Cost of Goods Sold
Cr: Inventory
At Billing:
Dr: Customer Account
Cr: Revenue Account
Importance:
Backbone of routine sales operations.
Handles scheduling, credit management, and delivery planning.
Used as the default type in most organizations.
Scenario:
A distributor orders 500 units of finished goods. The sales team creates an OR order in SAP. Delivery is scheduled in 7 days, and once goods are shipped, an invoice is raised and posted to accounting.
Standard Order Flow (OR)
2. Rush Order (RO)
Definition:
A rush order is created when a customer requires immediate delivery. On saving the sales order, SAP automatically creates the delivery.
Process Flow:
Create Sales Order (VA01) → Enter order type RO.
Delivery (VL01N) → The Delivery document is automatically created once the order is saved.
PGI (VL02N) → Goods are issued immediately.
Billing (VF01) → Invoice is generated.
Accounting Entries:
At PGI:
Dr: Cost of Goods Sold
Cr: Inventory
At Billing:
Dr: Customer Account
Cr: Revenue Account
Importance:
Critical for urgent customer requirements.
Saves time by skipping delivery scheduling.
Used in service industries and breakdown situations.
Scenario:
A factory’s machine breaks down, and they urgently need spare parts. The vendor creates a Rush Order (RO) in VA01 → the system instantly generates delivery → parts are shipped immediately → billing follows.
Rush Order Flow (RO)
3. Cash Sales (CS)
Definition:
Cash sales are common in retail and counter sales where the customer pays immediately for the goods. Example: Wal-Mart, Big Bazaar.
Process Flow:
Create Sales Order (VA01) → Enter order type CS.
Delivery (VL01N) → Delivery is automatically created.
PGI (VL02N) → Goods issue is posted.
Billing (VF01) → A cash sales invoice is generated.
Accounting Entries:
At PGI:
Dr: Cost of Goods Sold
Cr: Inventory
At Billing:
Dr: Cash Settlement Account
Cr: Revenue Account
Importance:
Simplifies retail sales by combining billing and payment.
Eliminates the need for credit checks.
Ideal for walk-in customers and direct purchases.
Scenario:
A customer buys a washing machine at a Walmart store. The sales clerk creates a CS order in SAP → delivery and invoice are generated immediately → customer pays cash and takes the product home.
Cash Sales (CS)
4. Return Order (RE)
Definition:
A return order is created when a customer returns goods due to damage, defect, or expiry. It ensures that the stock and accounting entries are reversed properly.
Process Flow:
Create Return Order (VA01) → Enter order type RE (reference the original invoice).
Return Delivery (VL01N) → Goods are returned to stock.
Return Invoice (VF01) → A credit memo is issued to the customer.
Accounting Entries:
At Return Delivery:
Dr: Inventory
Cr: Cost of Goods Sold
At Return Invoice:
Dr: Revenue Account
Cr: Customer Account
Importance:
Manages product returns efficiently.
Ensures accounting reversals are accurate.
Improves customer satisfaction by handling returns transparently.
Scenario:
A customer receives a damaged refrigerator. A Return Order (RE) is created in SAP with reference to the original invoice → return delivery brings the fridge back to stock → the system generates a credit memo to refund or adjust the customer’s account.
Return Order (RE)
Scenario
Accounting Entries with Order Types
Comparison of Sales Order Types
Order Flow
T-Codes & Table Names
Important T-Codes for Sales Orders
VOV8 → Define Sales Document Types (configuration)
OVAZ → Assign Sales Document Types to Sales Area
VN01 → Maintain Number Ranges for Sales Documents
Key SAP Tables for Sales Orders
TVAK → Sales Document Types (Configuration)
TVAP → Sales Document Item Categories
Common Issues
Wrong order type selection leading to incorrect billing.
Delivery issues if ATP (availability check) is not configured.
Cash sales without proper cash settlement accounts may cause FI errors.
Return orders not linked to original invoices can result in reconciliation issues.
Step-by-Step Configuration for Sales Order Types
Step 1: Define Sales Document Type
T-Code: VOV8
Path: SPRO → IMG → Sales and Distribution → Sales → Sales Documents → Sales Document Header → Define Sales Document Types
Activities:
Create new order type (e.g., ZOR for a custom standard order)
Set controls like item number increment, delivery relevance, billing relevance, reference requirement
Step 2: Assign Sales Area to Sales Document Type
T-Code: OVAZ
Combine Sales Organization, Distribution Channel, and Division
Assign the newly created order type (e.g., ZOR)
Step 3: Maintain Number Ranges for Sales Documents
T-Code: VN01
Define number ranges for sales documents
Assign number range to sales order type via VOV8
Step 4: Test the Configuration
Create a sales order using VA01 with the new order type
Verify that delivery and billing behaviour match the setup
Check accounting entries to ensure correct posting
Conclusion
Sales order types in SAP SD are more than just codes — they control the flow of goods, billing, and accounting in the entire order-to-cash cycle. By understanding the differences between Standard Orders, Rush Orders, Cash Sales, and Return Orders, businesses can streamline operations and improve accuracy.
By mastering importance, scenarios, T-codes, tables, and configuration steps, consultants and business users can configure SAP SD to better match organizational needs and ensure smooth order-to-cash operations.
