ANS-0587 · ACCOUNTING & FINANCIAL CONFIGURATION
How Does a Drop Ship Order Impact the General Ledger in NetSuite?
Understand the specific financial transactions and posting impacts associated with drop ship orders in NetSuite, particularly regarding Cost of Goods Sold.
Short answer
In NetSuite, a drop ship order does not generate a Cost of Goods Sold (COGS) impact, even when an inventory item is used. The primary posting impacts are limited to the Vendor Bill, which records a Purchases/Expense impact, and the Customer Invoice, which records a Sales/Income impact. The Item Fulfillment transaction itself has no financial posting impact.
Scenario
Users often expect a Cost of Goods Sold (COGS) impact when processing drop ship orders in NetSuite, especially when the order involves an inventory item. However, the financial postings for drop ship transactions differ from standard sales orders, leading to questions about the absence of COGS.
Solution
When a drop ship order is processed in NetSuite, the financial posting impacts are specific and do not include Cost of Goods Sold (COGS), even if an Inventory Item is utilized. The only transactions that generate a posting impact for a drop ship order are:
The Vendor Bill, which creates a Purchases/Expense impact.
The Customer Invoice, which creates a Sales/Income impact.The Item Fulfillment associated with a drop ship order has no financial posting impact.
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