What Are Delivery Challans?
As a businessperson, is this question placing you in a dilemma? Well, this article contains all your answers!
Also known as a dispatch challan or a delivery slip, a delivery challan is a document that contains the description, condition, and quantity of goods delivered.
The paper outlines the recipient of the products, their locations and the date of delivery. The main purpose of a delivery challan is the indication that goods are delivered and that the customer has acknowledged their receipt.
Doesn’t sound so complicated, does it? I hope not!
A minimum of four copies of a delivery challan must be prepared for transaction purposes. The four copies serve the following four functions:
- The first copy is sent to the accounts department.
- The second goes to the sales department.
- The third copy is issued to the customer.
- The store department must retain the last copy for the purpose of record keeping.
It is imperative to note that a delivery challan is sent along with the shipped goods and it might, in some cases, not result in sales.
However, it is prepared with the hope that purchases will be made. A delivery challan is a central piece that is used by almost every organization in everyday transactions.
The Difference Between an Invoice and A Delivery Challan
As a seasoned person in business, you could be wondering what difference exists between an invoice and a delivery challan since their functions look alike!
Well, here is the difference!
An invoice is a document which the customers use to show legal proof of ownership of the goods. With an invoice, the customer has accepted the full ownership of goods, with all the rights, risks and liabilities that they carry along.
This is not the case with a mere delivery challan.
As highlighted above, a delivery challan serves the sole purpose of showing that the customer has acknowledged the receipt of goods, but not their legal ownership or responsibilities.
Another slight difference between these two documents is that an invoice indicates the actual value of goods delivered while a delivery challan does not. However, in some cases, a delivery challan may include the value of goods, but it never shows the tax charged to a customer.
Also, it is worth noting that an invoice and a delivery challan can be merged to result in something referred to as a “Tax invoice cum delivery challan.”
The Format of a Delivery Challan
With this kind of information on your fingertips, you must be eager to learn about the formatting of a delivery challan. That’s what a shrewd businessman does, isn’t it? Well, here is what goes into creating a delivery challan.
- The date and the number of the delivery challan
- The serial number of the delivery challan
- The name and the address of a registered supplier
- The name and the specific identity of the buyer
- The quantity and the description of the goods, including their HSN code
- The name and address of the transporter, otherwise known as the consigner
- The place where the delivery is to be made
These are the most critical aspects that must be included in a delivery challan.
To make a challan more efficient, be keen on capturing the fine details of the goods such as the HSN code, their taxable value, and their description.
It is also important to note that the inclusion of a serial number in a delivery challan is compulsory. This is because a serial number identifies a challan and makes it easy to refer to a particular challan. Moreover, in cases where the recipient of goods is not registered, the location of a business must be mentioned in a delivery challan.
When Is A Delivery Challan Issued?
You are probably struggling over finding an answer to this question. These are the circumstances that compel you to issue a delivery challan:
- When you need to determine the number of goods at the time of dispatch
- In the case where the supplier’s business location is undisclosed to the recipient of goods
- When you are supplying goods upon approval
- When you are transporting goods for job work
Under any of these circumstances, a delivery challan can be issued.
The Bottom Line
Record keeping is a vital culture worth being cultivated by any successful business organization. In record keeping, books of account and other relevant documents must be maintained. One such document is the delivery challan.
Using an inventory management software like ProfitBooks can help you systemize this process. With ProfitBooks, you can record inventory purchases and sales very easily. Creating a sales order and delivery challan is a matter of few clicks.
If you deal with inventory in your business, you should try ProfitBooks.Try ProfitBooks FREE