Overview

A Drop Ship Purchase Order (PO) lets you fulfill a Sales Order by shipping goods directly from your vendor to your customer, bypassing your warehouse entirely. When you receive a Drop Ship PO in full, Accounting Seed automatically allocates inventory to the originating Sales Order and creates a Shipment record. No manual Pack and Ship steps are required.

In this article:

• Before You Begin
• Step 1: Create the Drop Ship Purchase Order
• Step 2: Receive the Drop Ship Purchase Order in Full
• Step 3: Review Automatic Allocation and Shipment
• Step 4: Create the Payable
• Related Articles

Before You Begin

• Drop Ship POs must be created from a Sales Order. You cannot create a standalone Drop Ship PO and have it behave as a drop shipment.
• The product's Inventory Type must be set to Purchased on the Product record. This is the expected setup for Drop Ship items.
• Best practice: Create a dedicated Drop Ship Warehouse and add a Location to it. Because goods never physically arrive at your location, the warehouse selected during receipt is nominal. A dedicated warehouse keeps Inventory Quantity Adjustment (IQA) records clean and distinguishable from physical stock.
• Ensure the Create Purchase Orders button is on your Sales Order list view, if not, ask your Salesforce Admin to add it.
• Important: At the appropriate time in the workflow (Step 2 in this article) a Drop Ship PO must be received in full in a single receipt.

Step 1: Create the Drop Ship Purchase Order

Drop Ship POs are created from the Sales Order record. For the full procedure, see Create Purchase Order from Sales Order (Standard Cost).

1. Navigate to Accounting Home > Create Entries > Orders > Sales Orders.
2. From the Sales Order list view, select a list view other than Recently Viewed and then select one or more Sales Orders for which you want to create a Drop Ship Purchase Order.
3. Click Create Purchase Orders.
4. On this intermediate screen, the Aggregate by Product? field is checked by default and aggregates SO lines that have the same Product, GLAV, Project and Comments - you can uncheck this if you do not need aggregation. See the 'Aggregate Lines by Product' section in the Create Purchase Order from Sales Order article for more information.
5. Next, for each product, select a Vendor.  If you have the Default Vendor populated on the product, this will automatically populate on this screen.

   

6. Click the View Draft Purchase Orders button; the Draft Purchase Orders section is displayed below.
7. If multi-currency, select the appropriate currency.
8. In the PO Type picklist, select Drop Shipment.
9. Review the PO lines, including Quantity, Unit Price, and Total.
10. Once ready, click the Create Purchase Orders button.

The Drop Ship PO is created:

Setting the PO Type to Drop Shipment links the PO to the originating Sales Order and enables automatic allocation and Shipment creation on full receipt. The link to the originating SO is at the PO line level; click on the PO Line and then on the Sales Order Lines tab:

Step 2: Receive the Drop Ship Purchase Order in Full

After your vendor confirms shipment to the customer, receive the PO in full in the system to record the transaction and trigger automatic allocation. Important: The PO must be received in full in a single receipt, as partial receipts will not trigger automatic allocation or Shipment creation.

1. Navigate to the Drop Ship Purchase Order.
2. Click Receive.
3. In the Purchase Order Receive screen, select your Drop Ship warehouse, Location, and in the Quantity All picklist choose Yes.
4. Confirm the Quantity entered matches the full ordered quantity.
5. Click Save & Complete.

On the Purchase Order, the Quantity Received is now updated to the full quantity and Quantity Unreceived is set to 0.

Accounting Seed creates a Purchase Inventory Movement (PIM) record that records the received inventory and posts the inventory value to the general ledger. To view the PIM, click on the PO Line > PO Inventory Movements tab > click on the PIM record:

Note: With Standard Cost, the PIM posts the Quantity × Unit Cost (Unit Cost set on the product).

Step 3: Review Automatic Allocation and Shipment

After full receipt, Accounting Seed performs the following automatically:

• Inventory allocation: The received inventory is allocated to the originating Sales Order. You do not need to run the Allocate Inventory step manually for drop-shipped items.

  

• Shipment record: A Shipment record is created automatically and labeled as a drop shipment tied to the originating PO. No manual Pack and Ship steps are required. To confirm the allocation and Shipment were created, from the Sales Order click the Billings & Shipment Lines tab and then click the Shipment record SP-####:

  

Why IQA records show a quantity of 0

After receipt, you may see IQA records with a quantity of 0 on the Drop Ship warehouse. This is expected behavior. The PIM (inbound) and the automatic Sales Inventory Movement (SIM, representing allocation to the Sales Order) occur in sequence and net to zero, because the goods were never held in physical stock.

Step 4: Create the Payable

After receiving the PO, create a Payable to record the vendor liability.

1. Navigate to the Drop Ship Purchase Order.
2. Click Create Payable.
3. Enter the Issue Date, Due Date, and select the PO Status you would like the PO to be updated to (for example, "Closed").
4. In the lines section, in the Amount to Pay: Pay All? picklist, choose Yes. Review the remaining Payable details.
5. Click Create Payable.

   

6. Click Save on the Edit AP-##### window to finish creating your Payable. Once reviewed, send for approval and follow your process to post the Payable.

Related Articles

Standard Cost

• Create Purchase Order from Sales Order (Standard Cost)
• Create or Clone a Purchase Order (Standard Cost)
• Receive/Unreceive a Purchase Order (Standard Cost)
• Allocate Inventory to a Sales Order (Standard Cost)
• Pack and Ship (Standard Cost)

General

• Orders & Inventory Features Overview
• Debit & Credit Entries Created When Posting

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