I swear I checked it like 5 times that my preference is set to invoice what order still while generating invoice from sales order it asking me set invoice what is order or deliver the Order.
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Please make sure the products added in the Sales Order have the "Invoicing Policy=Ordered quantities" as shown in the screenshot.
Once you set the invoicing policy in the product(s), either create a new Sales Order or Cancel, Set to Draft, and Confirm the existing Sales Order and try to create the invoice.
This time you will be able to create the invoice based on Ordered Quantities.
