How to Set Up a Drop-Ship Process in D365 Business Central

By Deb Schaffer | September 1, 2020

A drop-ship transaction is one that typically originates with a Sales Order. From the Sales Order, a Purchase Order to the vendor is created. When the vendor ships the product, it is shipped directly to the customer, so the product is never in your warehouse.

The steps below show the process of creating the Sales Order and the related Purchase Order, as well as the process to receive in and invoice the Purchase Order and Sales Invoice.

Steps to Set up Drop-Ship in D365 Business Central

Enter in the Sales Order with line information, then check the Drop Ship checkbox. You may have to add the Drop-Ship checkbox if it is not visible on the line. This can be added via Personalization. Then release the sales order and close the window.

Sales Order

Next, open the Purchase Order page to enter the PO. Go to Actions > + Purchase Order Order on your home page.

Enter the Vendor No and the Vendor Invoice number, if you know it. Do not create any purchase order lines.

Purchase Order

Scroll down to the Shipping and Payment tab. Change the Ship-to to Customer Address and select the customer from the Sales Order.

Purchase Order

You can link the Sales Order to the Purchase Order by clicking on Actions > Functions > Drop Shipment > Get Sales Order and selecting the Sales Order. This will create Purchase Order Lines from the Sales Order lines. Then click on OK.

Purchase Order

This will open the Sales List – Order selection window. Select the Sales Order that goes with the Purchase Order and then release the purchase order.

Sales List

The next step is to post the Drop Shipment. You can do this either by posting the Sales Order or receive the purchase order. The purchase order cannot be invoiced before the Sales Order is posted.

Bring up the Sales Order and click on Post.

Sales Order

Leave Ship and Invoice marked and click on OK.

Then the Purchase Order can be invoiced. Because it is a drop-ship, you will also do the Receive and Invoice Match in one step.

Purchase Order

If you need help setting up your Dynamics 365 Business Central solution, let us know! We've got a stellar support team.


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