Process drop shipments
A drop shipment is the shipment of an item, or the consignment of an item, from a company's vendor directly to a customer. Companies use drop shipments when they want to avoid handling the physical goods in an order, such as stocking and delivering.
However, typically you may want to still fulfill the customer's request and include the transaction in the calculation of the cost of goods sold and the cost of goods profit accounts.
Drop shipments include the following tasks:
The customer places a sales order with the company
The company places a purchase order with the vendor
The vendor delivers the ordered items directly to the customer
The vendor invoices the company for the shipment
The company invoices the customer
Now let's show how to make one example of drop shipment. When a sales order is marked for drop shipment, and you create a purchase order specifying the customer in the Customer Name field, you can link the two documents and thereby instruct the vendor to ship directly to the customer.
Process drop shipments
Watch the following demonstration video to see how to process a drop shipment.