Understanding the Transaction Cycle

When a customer purchases a product, the transaction cycle occurs as follows:

1. An order is created. This order has no impact on accounting processes. It is not A/R or revenue: the order is simply a proforma invoice that creates a record of the order in the system.
   An order created without an invoice is referred to as an "open order." There are certain scenarios in which this can be useful, as an open order allows staff to make changes to the order before it is invoiced.

   See the help topic, Using Open Orders for more information.

2. An invoice is created, which credits revenue and debits A/R. An invoice is created for any order that has any portion of a payment on it, or if the Bill Me payment option and “Create Invoice” were selected during checkout. Invoices do not replace orders, and multiple invoices can be associated with one order.

3. Payment is applied, which debits Cash and credits the AR account.

When a transaction is completed and paid in full, all three of the steps above take place at once.