Sales cycle: from quotation to collection
2 min read
Updated 03 Oct 2026
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AI summary
The steps from quotation to cash, the documents at each stage, and how sales returns are handled in accounts and GST.
8 sections
Key facts
- A clean sales cycle makes sure every delivery is billed, every bill is correct for GST, and every bill is collected.
- Issue the tax invoice on or before removal of goods. For services, issue it within 30 days of completing the service.
- Set a credit limit and credit period for each customer and check them before accepting a new order.
Steps in the cycle
| Step | Document | GST point |
|---|---|---|
| 1. Enquiry and quote | Quotation / proforma invoice | No GST liability yet |
| 2. Order confirmed | Sales order | Check customer GSTIN and state |
| 3. Goods dispatched | Delivery challan (if invoice later) and e-way bill above ₹50,000 | Invoice due by time of removal |
| 4. Bill raised | Tax invoice (e-invoice IRN if your turnover crossed ₹5 crore) | Report in GSTR-1 |
| 5. Collection | Receipt voucher, TDS certificate if customer deducted TDS | |
| 6. Follow-up | Receivables ageing, reminders, statements |
Sales returns
- When a customer returns goods, issue a GST credit note referring to the original invoice. Report it in GSTR-1 and it reduces your output tax.
- Credit notes for a year can be issued until 30 November of the next year or the date you file the annual return, whichever is earlier.
| Event | Entry |
|---|---|
| Sale | Customer A/c Dr, To Sales A/c, To Output CGST/SGST or IGST |
| Return | Sales Returns A/c Dr, Output CGST/SGST or IGST Dr, To Customer A/c |
| Collection with TDS | Bank A/c Dr, TDS Receivable A/c Dr, To Customer A/c |
Common questions
Is a proforma invoice a tax invoice?
No. A proforma invoice is only an offer or a request for advance. GST is not payable on it, and the buyer cannot claim ITC on it.
What if the customer pays less than the invoice?
Find out why: TDS, a discount, a short supply or a dispute. Record TDS against the TDS receivable account. For a discount or short supply, issue a credit note if you want to reduce GST.
Can I cancel an invoice?
An e-invoice IRN can be cancelled within 24 hours. After that, or for a normal invoice already reported, issue a credit note instead of deleting it.
Sources
Law as of October 2026. Verify against the latest notifications before relying on it for filings.
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