Question

Link COGS for non-inventory drop shipping items to sales estimate/invoice.

Forum|Forum|5 years ago
December 8, 2020
14 replies
81 views

I run QuickBooks Online Simple Start and have a drop shipping business where we sell an individual item (recording in QB as a sales receipt with a sales estimate/invoice) and pay our supplier directly without taking inventory for that individual non-inventory item (recording in QB as a COGS expense). Using this method (recording the sale with a sales estimate/invoice and the non-inventory expense as a COGS expense) any profitability report by customer or (non-inventory) product shows the COGS expenses as "Not Specified" i.e. the COGS expense is not tied to the respective sales estimate/invoice even though there is a clear 1:1 relationship between a single sales invoice and the single related supplier expense made for that invoice (given the dropship nature of the business). How can I simply link the expense of a drop ship order to the sales estimate/invoice of that same order to record that 1:1 relationship so reports on profitability by product, customer, etc. work correctly? Thank you so much for any help, have been breaking my head trying to figure out this seemingly easy question :-(

QuickBooks Online

J

JonpriL

Level 9

Hello @nc0814 ,

You can utilize the Tags feature so you can assign a label for your transaction. Let me show you how.

Go to the Gear icon.
Under YOUR COMPANY, select QuickBooks Labs.
Toggle the Tags feature to turn it on.

Once done, you can start recording your sales and expenses with tags. To do so:

Go to the Gear icon.
Under LISTS, select Tags.
Click New.

Learn more about tag with this helpful article: Find out how to use tags and group tags to get deeper insights into your sales and expenses.

Additionally, I've also included this helpful article to get a better view of your business's financial status: Run basic financial reports.

If you have any other questions, please let me know by leaving any comments below. I'll be here to lend a hand. Stay safe!

N

nc0814Author

Thank you so much - very helpful! That said, does feel like a workaround to manually add tags which duplicate information already stored in QB (i.e. product, customer, etc.) instead of simply linking a COGS to an invoice which has that information. This would be a great solution for info NOT yet in an invoice but all I would like is simply to have the profit report by customer and by product work correctly by linking a COGS entry to an invoice it relates to so that the cost is tied to the product or customer of that invoice rather than showing up as "Not Categorized". No way to do this aside from tags?

C

ccorder

I have a client with a drop shipping business and I have been looking for ways to make this work. I have been testing the use of Projects. I have created a "Project" for each drop ship sale. Essentially an end to end drop ship sale includes 1. Sale to Customer (Revenue, discounts, etc.) 2. Purchase from Vendor (Bill and/or PO) 3. Possible additional Shipping Costs 4. Reference to Non-Inventory Item. I have tried examples with Sales Orders, Sales Receipts, Invoice, and combinations. I have also tried examples with PO and Bill, Bill without PO, etc.

So far I like that you can see the entire "Drop Ship Sale" all in one place under the Project. I also like that depending on how you use the various transactions you can see the status of the overall transaction - i.e. Has item been ordered, has it been shipped, have you paid supplier, has customer paid you, etc.

What I don't like is that it seems a bit cumbersome and there are not many "Project" reports to use.

From an accounting standpoint - recording sales and cost of goods sold with shipping costs etc seems to work pretty well.

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