Accounting Flow in Drop-Ship (Oracle Fusion Order Management)

 

Accounting Flow in Drop-Ship (Oracle Fusion Order Management)

1. Sales Order Booking

  • No accounting entry at this stage because no financial transaction happens yet.

  • The order is just recorded in the system.

2. Purchase Order Creation to Supplier

  • PO is created automatically from the drop-ship sales order line.

  • No accounting entries yet, since it’s just a commitment to buy.

3. Supplier Ships to Customer (Receipt of Shipment Confirmation)

  • Shipment confirmation is received from the supplier, indicating goods have been shipped directly to the customer.

  • Inventory is not impacted since goods never enter company stock.

4. Invoice Creation (Accounts Receivable)

At this point, revenue is recognized.

Accounting Entry:

  • Dr. Accounts Receivable (Customer invoice amount)

  • Cr. Revenue (Sales revenue account)

  • Cr. Taxes Payable (if applicable)

5. Supplier Invoice (Accounts Payable)

  • Supplier invoice is received and matched with the PO.

Accounting Entry:

  • Dr. Expense or COGS (Cost of goods purchased)

  • Cr. Accounts Payable (Supplier liability)

6. Customer Payment Receipt

  • Customer pays the invoice.

Accounting Entry:

  • Dr. Cash / Bank

  • Cr. Accounts Receivable

7. Payment to Supplier

  • Payment is made to the supplier.

Accounting Entry:

  • Dr. Accounts Payable

  • Cr. Cash / Bank

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