Drop shipment inventory flow

Merchandise moves from your vendor to your customer. Creating a customer sales order does not require a link to a purchase order if the merchandise is considered “Active” and is maintained in stock.

• There is an option to link a PO to an SO for a non Direct Ship. This is useful when a sale of “Non-Stock” items occurs and the request to the vendor is to fulfill that particular order.
• The Vendor invoice may be entered through the Stock Receipts screen or A/P Invoice Entry screen.

Merchandise bypasses all onsite warehouses and is moved directly from vendor to customer. Creation of a Sales Order triggers a Purchase Order to be generated automatically to the vendor.

• When the vendor sends you the invoice, enter the PO in the Stock Receipts screen.
• The vendor’s invoice must be entered on the A/P page of the Stock Receipts Entry screen.
• A customer invoice will be placed in the billing batch at the Stock Receipts step – to be posted with other sales invoices – by answering affirmatively to the system prompt.

When you enter a Sales Order for Drop Ship products, the system creates the Drop Ship Purchase Order when the Sales Order is saved. This P/O can still be edited before it is sent to the vendor, so you can print it or send a message to your Purchasing Department for review. Once you receive the vendor's invoice for the drop shipment, you can enter the invoice and bill the customer.

1. Go to Sales > Order > Sales Order.
2. Click the Detail tab. Enter the Product Number, Product Description, or Keyword and press the Tab key.
3. In the Quant Ordered column, type the quantity to be shipped, and then press the Tab key.
4. Right-click the product to be drop shipped and choose Procurement. You can also click the item and then click the Procurement tab.
5. In the P/O Type field, select Drop Ship P/O. Verify the vendor in the Vendor field. This defaults to the primary vendor for the product, if one is available. When ordering the product from a different vendor, erase the vendor and enter a new one.

   Note: If a vendor does not appear in this field, search for a Vendor by name other data. A vendor must be entered before the Sales Order can be completed.

6. Click the Line Items tab and review the new information under the product. This should include the drop ship vendor's name.
7. Click Save.
8. Click the Final tab, and you will see the drop ship Purchase Order that has been created in a window at the bottom of the screen.
   • To review this Purchase Order, click on the Edit P/O button.
   • To print the Purchase Order, click the Print P/O button.
   • To fax or email the Purchase Order to the vendor, click the Send P/O button.

   Note: The system will not create a Purchase Order for orders that are placed on Credit Hold. Once the order is released, you must re-open and re-save the order to create the P/O.

When you receive the vendor's invoice for a drop shipment, enter the invoice and bill the customer through the Stock Receipts screen. Do NOT enter drop ship invoices through the A/P Invoice Entry screen.
To enter a vendor's drop ship invoice follow the easy steps below. You can still make changes to the customer's invoice before it is posted; this process only adds the customer's invoice to the billing batch, it does not post it.

1. Go to Purchasing > Stock Receipts.
2. Type the number for the Drop Ship P/O in the P/O Number field and press Tab.
3. The window will list each product that was drop shipped on the order, along with the quantity. Enter the quantity that the vendor has shipped in the Quantity Received field for each product. If the order was received complete, you can click on the Receive All button in the bottom toolbar.
4. Once you have entered all of the quantities, click on the A/P Invoice tab. This will allow you to enter the vendor's invoice. Enter the vendor's Invoice Number, Invoice Date, Freight, and Tax into the appropriate fields and press Tab. You will see the General Ledger accounts that the amounts will be posted to on the right. The direct ship inventory account will populate, not the inventory account.
5. Once the vendor's invoice information has been entered, click the Save button in the bottom toolbar. A window will pop up asking if you want to invoice the customer. It will also give you the opportunity to enter the amount of freight that you want to charge the customer on the invoice. Enter the freight amount and then click the OK button. This will add the customer's invoice to your billing batch (no need to go to billing screen in invoicing menu).
6. If you need to make changes or add additional information to the vendor's invoice, you can access it through the A/P Invoice Entry screen. Enter the vendor and invoice number in the Invoice Number field and press Tab. This will open the invoice. Then, click the Edit button in the bottom toolbar, make any necessary changes, and click the Save button in the bottom toolbar to re-save the invoice.

What causes the Drop Ship Inventory G/L account to show a balance?

1. Consumable items such as Labor being included on the customer sales order, but not on the purchase order. This can cause the drop ship inventory balance to go negative.
2. Delays between updating of vendor and customer transactions. DDI recommends that the customer is billed immediately after the stock receipt has been processed.
3. Posting the sales invoice prematurely. This might cause the AP invoice to be posted to the default inventory account and not the drop ship inventory account.
4. Editing the PO at the receiving step, but failing to go back and edit the corresponding SO. This will create a permanent difference.
5. Posting the AP invoice incorrectly. Use the stock receipts screen to ensure that the invoice posts to the Drop Ship Inventory G/L.