In the context of drop-shipping products, the term “Bill” refers specifically to the invoice that a vendor sends to us for the items they have supplied directly to our customer on our behalf. When a drop-ship Purchase Order (PO) is created, the vendor fulfills the order by shipping the product directly to the end customer. Once the order is shipped, the vendor issues a Bill (invoice) to us, the purchasing company, for the items provided.
Here’s a step-by-step overview of how the billing process works for drop-ship POs:
- Creation of Drop-Ship Purchase Order:
- A drop-ship PO is generated in NetSuite, specifying the items to be shipped directly from the vendor to the customer, along with relevant details such as quantities, agreed-upon prices, and shipping instructions.
- Vendor Fulfills the Order:
- The vendor receives the drop-ship PO and ships the products directly to the customer. They handle the shipping process, including packaging and logistics, according to the instructions provided.
- Vendor Issues a Bill:
- After shipping the product, the vendor sends an invoice (referred to as a “Bill” in NetSuite terminology) to us. This Bill indicates the amount payable for the products shipped, including any applicable taxes and shipping charges.
- Recording the Bill in NetSuite:
- Once the Bill is received, it is recorded in NetSuite against the corresponding drop-ship PO. This entry allows us to track the expense associated with the drop-ship transaction, ensuring that the cost is properly accounted for in our financial records.
- Tracking and Approval:
- The Bill undergoes the usual tracking and approval process within NetSuite to verify that the invoiced amounts match the PO terms and that the order has been fulfilled correctly. Once approved, the Bill is scheduled for payment based on the agreed payment terms.
- Payment to Vendor:
- After approval, payment is processed to the vendor. This completes the financial transaction related to the drop-ship order.
Key Points to Note:
- Use of “Bill” in NetSuite: In NetSuite, the term “Bill” specifically refers to the vendor’s invoice for the purchase transaction. It serves as a record of what we owe the vendor for the goods or services provided.
- Tracking Drop-Ship Expenses: By recording the Bill, we maintain an accurate track of expenses related to drop-ship POs, ensuring our accounting records reflect the actual cost of goods sold.
- Importance in Workflow: Correct handling of Bills is critical in the drop-shipping process to ensure vendors are paid timely and inventory costs are accurately reflected in our financials.