HUGE problem with Drop Shipping Workflow!

Frappe Framework Bug
1

The problem that I am facing is that items that are drop shipped do not make it into the Cost of Goods sold account, which completely messes up our P&L reports.

I’ve been testing erpnext out for several weeks, since we are anticipating switching over to it at the beginning of next year, but the problem that I discovered today may have put the breaks on that goal indefinitely. I’m hoping that maybe I am just doing something incorrectly, but as it is right now, I simply cannot see what it is that I could be doing wrong.

Here is the current workflow I am using.

1: I, or a member of the sales team creates a Sales Order for the customer.

2: All items that are being drop shipped are marked as so, and are assigned to a Supplier.

3: Sales Order is submitted and then we click the “Purchase Order” button to create the PO.

4: Purchase Order is created, undergoes any needed modifications, and is then submitted and sent to the supplier.

5: Once we receive delivery confirmation from the supplier, we then click the “Mark as Delivered” button within the Purchase Order.

6: From here, we go back to the Sales Order and click “Invoice.”

Using the above workflow, the purchased items do no show up under Cost of Goods Sold, and in return, when a P&L report is generated, it shows that we are are well above what we actually are.

For example, let’s say we have a customer that orders $100 worth of merchandise. Our cost is $50. If we drop ship their items to them using the above method, and then ran a P&L report, it would show that we had a Net Profit of $100 as opposed to $50.

I sincerely hope that I am simply doing something wrong, and someone can tell me what needs to change in my workflow. Otherwise, if this is indeed not how the software is supposed to work, then I would hope that a fix will be rolled out quickly.

2

Your Supplier will send you an invoice at some point which you can mark against Cost of Goods Sold.

3

Thanks rmehta.

That does not appear to do anything unfortunately.

First off, when I entered the Purchase Invoice in, and tried to pull the data from a drop shipped Purchase Order, it would not pull the items in as it would on a PO that was not drop shipped. I’m not sure if this is normal behavior or a bug.

I then manually entered the Purchase Invoice in with matching information to the PO, and then submitted it, but that still did not enter it under the Cost of Goods Sold account. It appears that the only types of vouchers that I am seeing under Cost of Goods Sold are Delivery Notes and Sales Invoices that were not drop shipped.

So either we have something configured incorrectly, or there is an underlying issue that needs to be addressed on the development side.

4

As a workaround, we can forgo using the drop ship feature, and simply receive the items into inventory, and then create a Sales Invoice with the update stock option checked.

This will then enter the transaction into the Chart of Accounts: Cost of Goods Sold ledger.

I would greatly appreciate it if someone would look further into this matter. The Drop Ship feature was something that I was extremely excited about, since it would save us a bit of time from having to enter Purchases into inventory that we aren’t actually receiving. Thanks again.

5

@dsslrbrandon let me look into this. We have designed this by working with a customer.

@umair can you check?

6

Replicating this issue. For Drop Shipping Purchase Order, Item’s Received Qty and Billed Amount is getting fulfilled on the submission of Purchase Order itself. We will surely check for this issue and update you.

To be able to book expense on submission of Purchase Invoice, you should switch from perpetual inventory system to periodic inventory system. Steps below to achieve this.

  1. Go to Accounts > Setup > Accounts Settings
  2. Uncheck field “Make Accounting Entry For Every Stock Movement”.
7

Thanks for the suggestion. I just tried it out, and while that is another viable workaround. However, we like the perpetual system better, since it gives you a truer report on “Cost of Goods Sold” since the costs are linked to Sales Invoices and or delivery notes, rather than Purchase Invoices. Doing the latter will register all items purchased under “Cost of Goods Sold” as opposed, just the items that have actually sold.

I appreciate you guys looking into this, and I hope we see a fix soon.

8

Thanks for you suggestion. For now, please create Github Issue for your suggest of booking Cost of Goods Sold for drop shipping Purchase Invoice.

We will keep you posted via Github Issue.

9

Thank you for getting this fixed guys! We really appreciate it. :blush:

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