CUSTOMER

A customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service,
product, or idea, obtained from a seller, vendor, or supplier for a monetary or other valuable
consideration.
Customers are generally categorized into two types:
1.
2.

An intermediate customer or trade customer (more informally: "the trade") who is a

dealer that purchases goods for re-sale.
An ultimate customer who does not in turn re-sell the things bought but either passes
them to the consumer or actually is the consumer.

VENDOR
A vendor, also known as a supplier, is an individual or company that sells goods or services to
someone else in the economic production chain. The word vendor comes from the French verb
vendre, meaning to sell. It is a supply chain management term that means anyone who provides
goods or services to a company or individuals.

INTER COMPANY (IC)

A term used to describe activities that are conducted between two or more affiliates or business
units of the same parent company.

SUPPLY CHAIN MANAGEMENT (SCM)

Supply chain management (SCM) is the oversight of materials, information, and finances as they
move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply
chain management involves coordinating and integrating these flows both within and among
companies. It is said that the ultimate goal of any effective supply chain management system is to
reduce inventory (with the assumption that products are available when needed).

PURCHASE ORDER (PO)

A buyer-generated document that authorizes a purchase transaction. When accepted by the seller,
it becomes a contract binding on both parties. A purchase order sets forth the descriptions,
quantities, prices, discounts, payment terms, date of performance or shipment, other associated
terms and conditions, and identifies a specific seller. Also called order.

SALES ORDER (SO)

A seller-generated document that authorizes sale of the specified item(s), issued after receipt of a
customer's purchase order. A sales order usually implies that there will be no additional labor or
material cost incurred for the sale, except where it is used to initiate a production process.

The Sales Order is a confirmation document sent to the customers before delivering the
goods or services. Sales Order (SO) can be created once the quote is accepted by your prospective
customer (potential) and the Purchase Order (PO) is sent by the customer for further processing.
After receiving the PO, the customers may request SOs to know the exact date of delivery of the
goods or services. Also the inventory/production department looks at the list of Sales Orders to see
what needs to be shipped out and when. After the order is shipped and delivered to the customer
an invoice is generated from the sales order for billing purposes. In general, SO contains the SO
number, date, line items (products) including the quantities and prices based on the PO, Billing
address, Shipping address, and the Terms & Conditions.

CHALLAN
An official form or document, such as a receipt, invoice, or summons. A challan is a written
document mentioning all details of ordered goods of which one copy is kept by seller, one with
purchaser and one with transporter.

GOODS RECEIVED NOTE (GRN)

Record of goods received at the point of receipt. This record is used to confirm all goods have been
received and often compared to a purchase order before payment is issued.

PROFORMA INVOICE
An abridged or estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of
goods. It notes the kind and quantity of goods, their value, and other important information such as
weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices
with a quotation, or for customs purposes in importation. They differ from a normal invoice in not
being a demand or request for payment.

INVOICE
A non-negotiable commercial instrument issued by a seller to a buyer. It identifies both the trading
parties and lists, describes, and quantifies the items sold, shows the date of shipment and mode of
transport, prices and discounts (if any), and delivery and payment terms. In certain cases
(especially when it is signed by the seller or seller's agent), an invoice serves as a demand for
payment and becomes a document of title when paid in full. Types of invoice include commercial
invoice, consular invoice, customs invoice, and pro forma invoice. Also called a bill of sale or
contract of sale.

CREDIT NOTE
A form or letter sent by a seller to a buyer, stating that a certain amount has been credited to the
buyer's account. A credit note is issued in various situations to correct a mistake, such as when (1)
an invoice amount is overstated, (2) correct discount rate is not applied, (3) goods spoil within
guaranty period, or (4) they do not meet the buyer's specifications and are returned. Also called
credit memo.