what is a backorder 
a backorder is an order for a good or service that cannot be filled at the current time due to a lack of available supply the item may not be held in the company s available inventory but could still be in production or the company may need to still manufacture more of the product backorders are an indication that demand for a company s product outweighs its supply they may also be known as the company s backlog understanding backordersthe nature of the backorder and the number of items on backorder will affect the amount of time it takes before the customer eventually receives the ordered product the higher the number of items back ordered the higher the demand for the item backorders represent any amount of stock a company s customers have ordered but have not yet received because it currently isn t available in stock just because they may lack a supply of inventory that doesn t mean companies can t operate on backorder in fact companies can still do business even if they don t have inventory on the books keeping products on backorder helps boost demand retain and increase the customer base and creates value for their products a company s backorders are an important factor in its inventory management analysis the number of items on backorder and how long it takes to fulfill these customer orders can provide insight into how well the company manages its inventory a relatively manageable number of orders and a short turnaround time to fulfill orders generally mean the company is performing well on the other hand longer wait times and large backorders may be problematic 