Drop Ship, Shipment Notification and Cost Calculations in Dynamics GP

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An important consideration when evaluating and implementing the options for Drop Ship and using Shipment Notifications is the cost you want applied to the sales item.

In Dynamics GP, Sales Line items can be marked as Drop Ship by marking the D check box. Typically the next action is to create a Purchase Order from that Drop Ship line resulting in the item then being delivered from the supplier (vendor) directly to the customer.

So far, so good.

The next step is usually to process an Enter/Match transaction to indicate that the vendor has shipped the item to the customer. However, in some circumstances the invoice to the customer needs to be sent prior to the invoice from the vendor arriving for entry into GP.

The Shipment Notification tool will allow the Drop Ship Sales Line item on the order to be transferred to invoice prior to invoicing the purchase order.

This tools functionality, which is a part of the Professional Services Tools Library of additional downloads, can be automated using Dex.ini switches to allow administrators to drive actions, or there is a window in which an end user may choose the actions per transaction.

The following DEX.INI switches are available for use with the tool

  • taShipmentNotificationAlwaysTransfer = true
    • If this switch exists in the dex.ini and is set to true, orders will always be allowed to be transferred to invoices, even if the Shipped flag in the taShipmentNotification table is not marked.
  • taShipmentNotificationAlwaysPost = true
    • If this switch exists in the dex.ini and is set to true, invoices will always be allowed to post, even if the Shipped flag is not marked.
  • taShipmentNotificationAllowVoids = true
    • If this switch exists in the dex.ini and is set to true, invoices will be able to be voided, even if they have Purchase Order Commitments.

The alternative is a window (which is controlled by standard GP security) where an end user can specifically select which documents can transfer without doing a Purchase Invoice Match:

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All very helpful features for your consideration.

However, it is very important to note that it is at the time the Purchase Invoice Match takes place that the cost on the Purchase Order drives back to the Sales Order line. So, if you choose to use the Shipment Notification tool, and invoice the sale prior to matching the PO, the sales line item will pull the item cost from the Item record (depending on which valuation method you use on the item) not from the specific cost that the vendor charged you on the Purchase Order. The price on the sales line item is derived from the item price lists, so the cost (difference between price and cost) will determine your profit margin on this sale when you report sales. This profit margin is an important factor when reviewing your business sales activities.

InterDyn BMI would be happy to help you evaluate these features for your business use and point out any areas where you might need to carefully consider the overall impacts on your specific requirements.

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