What is a Drop Shipment in Business Central?

A Business Central flow where your vendor ships goods directly to your customer, handled through a linked sales order and purchase order.

A drop shipment in Business Central is a sale where the goods never touch your warehouse: the vendor ships directly to your customer, while you still invoice the customer and receive the vendor's invoice. BC handles this with a sales order and a purchase order that are linked to each other.

To start one, you mark the sales order line as Drop Shipment (either directly in the line's Drop Shipment field or via a Purchasing Code with drop shipment enabled). The purchase order is then created from the Requisition Worksheet using the Drop Shipment, Get Sales Orders function, or directly on a new purchase order for the vendor with the Get Sales Orders action. The customer's ship-to address is copied onto the purchase order automatically.

Shipping is linked: when the vendor confirms dispatch, posting the sales order as shipped automatically posts the purchase receipt (and posting the receipt on the purchase side posts the sales shipment). Invoicing then happens separately on each document. Item ledger entries are still created, one inbound and one outbound, so costs, margins, and statistics stay correct even though stock on hand nets to zero.

Drop shipments are popular for bulky items, special orders, and long-tail products you do not want to stock. Note that once the two orders are linked, BC restricts changes such as deleting one side or altering quantities, precisely to keep the pair consistent.

Related terms

• Purchase Order, A formal document sent to a vendor to order goods or services, with agreed quantities, prices, and delivery terms.
• Requisition Worksheet, A planning tool in Business Central used to create purchase suggestions and consolidate demand before issuing purchase orders.
• Vendor (Supplier), A company or person from whom you purchase goods or services, represented as a Vendor Card in Business Central.
• Goods Receipt, The process of recording received items against a purchase order in Business Central, updating inventory and triggering accruals.
• Purchase Invoice, A document recording a vendor's bill for goods or services received, used for accounts payable processing in Business Central.

How Zentriq helps

Zentriq's AI tools automate many of the manual processes around drop shipment in Business Central. Learn about the Zentriq Agent or try Zentriq PunchOut to see how AI simplifies procurement in BC.