DEFINITION of 'Backorder'

An order for a good or service that cannot be filled at the current time due to a lack of available supply. The higher the number of items backordered, the higher the demand for the item.


Backorders are an important factor in inventory management analysis. If a company consistently sees items in backorder then this could be taken as a signal that it is running too lean - and that it is losing out on business by not providing the products demanded by its customers.