Business Central drop shipments without losing track of the order

How Business Central drop shipments link two orders

The process starts on the sales order. You mark a line for drop shipment, usually through a purchasing code. Then a purchase order for the vendor carries the customer's address as the ship-to. The Get Sales Order action or the requisition worksheet pulls in the marked lines.

From that moment, the two lines know about each other. Quantities must stay in step, and the system blocks deleting one side while the link exists. We set up purchasing codes and train order entry on when to tick the box. We also adjust the purchase order layout, so the vendor clearly sees the delivery address.

Posting Business Central drop shipments when the vendor confirms

Nobody scans these goods, so posting follows the vendor's notice. When you post the sales order as shipped, Business Central posts the linked purchase receipt in the same step. Item ledger entries for the receipt and the shipment appear together. Stock on hand never changes.

Invoicing stays separate on each side. You invoice the customer from the sales order. You match the vendor invoice to the purchase order when it arrives. We rehearse partial dispatches and the right posting order. Trying to invoice the purchase before the sale ships is a frequent stumbling block.

Cost and margin on Business Central drop shipments

The receipt and shipment apply to each other. So the cost of that sale is the cost of that purchase. Margin on a drop-shipped line is therefore exact once the vendor invoice is posted. This holds whatever costing method the item uses for its regular stock.

You can add freight billed by the vendor with an item charge, so it lands on the same sale. We confirm that posting groups send these sales to the accounts you expect. We also add a simple report of drop-shipped revenue and margin by vendor. It often becomes the basis for deciding what to stock yourself.

Drop shipment, special order or plain purchase

A special order also ties a sales line to a purchase line. But the goods come to your warehouse first, and then you ship them. It suits items that need inspection, labeling or grouping with stocked products. A drop shipment suits bulky goods and items the vendor can deliver faster than you can.

Some companies mix both on one sales order. Stocked lines ship from the warehouse, and other lines go direct. That works, and the customer gets separate deliveries. We map which product groups use which route. Then we build the purchasing codes and item defaults, so order entry rarely has to think about it.

Running Business Central drop shipments day to day

The risk with direct delivery is silence. You place the order, and nobody hears anything until the customer asks. So we add views of open drop-shipment lines by promised date. We also use order promising fields, so everyone who opens the sales order can see the vendor's confirmed date.

You can automate notices too. A Power Automate flow can alert the account owner when a vendor confirmation is overdue. Tracking numbers entered on the shipment can go to the customer by print or email. Where vendors send confirmations electronically, EDI can update the orders without retyping.

Business Central drop shipments questions

Do drop shipments affect inventory quantities?

No. In Business Central drop shipments, the purchase receipt and the sales shipment post together and apply to each other, so the quantity on hand is the same before and after. Item ledger entries still exist. That keeps sales history and item statistics complete, so your reports stay accurate.

Can one purchase order cover several sales orders?

A drop-shipment purchase order in Business Central ties to one ship-to address, so it normally covers one customer delivery. You can combine lines from several sales orders for the same customer address. Different customers need separate purchase orders. That keeps each delivery clear for the vendor.

Which license includes drop shipments?

The feature is part of standard sales and purchasing, so both Essentials and Premium include it. Order entry staff need a full user license to create and post the orders. Microsoft publishes the current license details on its site, and we can walk through them with you.

Can we drop ship part of a line and send the rest from stock?

Not within one line. The usual answer is to split it into two lines on the sales order. You mark one for drop shipment, and the other ships from your location. Each line then follows its own route and posting. So the paper trail stays clean for both.

How do returns work for drop-shipped goods?

A sales return order brings the item back, either to your own location or, by agreement, straight to the vendor. In that case, a linked purchase return order covers the vendor side. We set up return reason codes, so these cases are easy to tell apart later.

Related order processing pages

Drop shipping is one route among several for getting goods to a customer. The pages below cover the sales and purchasing processes around it and the returns that sometimes follow. Read them to see how Business Central drop shipments fit into your order flow. Then tell us which products your vendors ship direct, and we will suggest a simple setup. For the product detail, see Microsoft Learn: make drop shipments.