What it means
A supplier receives an order for 1,000 components but has only 600 ready, so it may propose shipping those 600 now and the remaining 400 later. That is a partial shipment, and the buyer may welcome early stock or may need all 1,000 at once to start a production run.
Check the commercial purpose before assuming a split helps, because if the buyer needs a full matched set, 60% of individual parts may have no use and the seller should ask rather than dispatch unilaterally. Microsoft's Business Central documentation describes how systems process partial shipments against an order, and the ICC's UCP 600 contains rules for documentary credits, including partial shipment.
These sources address different contexts, so a system's ability to ship partially does not override a sales contract, and documentary-credit rules apply only where incorporated into the credit. The order or agreement should say whether splitting is permitted, and it may require the buyer's written consent, impose a final delivery date or prohibit extra freight charges.
Track each shipped lot against the original order by recording quantity ordered, quantity dispatched, received quantity and balance outstanding. If 600 are shipped against 1,000, 400 remain, assuming none were cancelled or returned, and an accurate open-order balance prevents a second team from believing the order is complete.
Shipment is not the same as delivery or acceptance, because goods can be lost, delayed, damaged or rejected after dispatch. Inventory records should distinguish what left the supplier's warehouse from what the buyer actually received, since contractual risk transfer may occur at a different point under agreed delivery terms.
Each lot needs clear documents, such as a packing list identifying item codes and quantities and a delivery note linking the lot to the purchase order. If two shipments arrive at different sites, the buyer should know which items belong where, because labelling errors can erase the benefit of early shipment.
Invoicing can occur per lot, on full completion or by another milestone, and there is no universal rule requiring a separate invoice for each part. If the contract allows invoicing on accepted quantities, the seller needs evidence of those quantities and the buyer should reconcile each invoice with receipts and remaining obligations.
Freight costs can rise when a single order becomes three trips, so decide who bears extra carriage, packaging or handling charges: a supplier-caused delay may not be passable to the buyer under agreed terms, while a buyer-requested early split may have different pricing, and the decision should be put in writing. For international trade, a documentary credit can constrain documents and shipment dates, and under UCP 600 partial shipments are permitted unless the credit prohibits them, subject to the rule's details.
Banks examine documents under the credit, not the practical usefulness of goods, so read the credit and the underlying sale contract separately, and do not treat "partial shipment allowed" as permission to ignore latest shipment dates, presentation deadlines or document consistency. Buyers should assess shortages by calculating cover from consumption rates, so that if the first lot covers a production line for two weeks the balance arrives before that period ends, and by tracking accepted quantities separately from dispatched ones.
In practice
Real-world examples.
Example
A supplier sends 600 of 1,000 ordered components now and 400 later. The order system keeps the purchase order open with a balance of 400 until the second lot is accepted. The buyer plans production around the two arrival dates.
Example
The buyer agrees to extra freight for an early split delivery. Because the buyer asked for the split, the extra carriage cost of $1,200 is recorded in writing as the buyer's responsibility. Without that record, the supplier and buyer would likely dispute who should pay.
Example
A documentary credit is checked for partial-shipment and presentation terms. The trade-finance team confirms that splitting is allowed and that each lot still meets the latest shipment date. Only then does the supplier release the first dispatch.
Formula
Calculation
Illustrative remaining quantity = Ordered quantity - Accepted quantity - Valid cancellations. Example: 1,000 ordered, 590 accepted, none cancelled = 410 still to fulfil. A dispatch of 600 alone does not establish acceptance of all 600.
Worked cover calculation: if the buyer's line consumes 50 units a day and the first lot is 600 units, the cover is 600 / 50 = 12 days. The balance of 400 units must therefore arrive within 12 days of the first lot's receipt to avoid a stoppage. If the 10 rejected units from the first lot are replaced, the quantity to fulfil rises accordingly, which is why accepted quantity, not dispatched quantity, drives the open balance.Case study
Seen in the real world.
This illustrative and entirely fictional case follows Solstice Pumps, an invented supplier. A customer orders 1,000 seals and asks for 600 early to keep a production line running. The parties agree the remaining date and extra freight before the first dispatch. The warehouse logs accepted quantity and keeps the open balance visible.
The case does not assume partial delivery is always permitted. When the first lot arrives, the customer rejects 10 seals for damage, so accepted quantity is 590 and the open balance is 410 rather than 400. The supplier replaces the damaged seals in the second lot and invoices on accepted quantities only. The record trail avoids an argument at the end of the order.
Watch out
Common mistakes.
- Dispatching a split order without checking whether the buyer permits partial shipment.
- Closing the entire purchase order after only the first lot has been accepted.
- Assuming every shipment can be invoiced independently or that the buyer pays at dispatch.
Questions
People also ask.
What is a partial shipment?
An order fulfilled through more than one shipment or lot.
Is it always allowed?
No. Check the sales contract; a documentary credit has its own terms and applicable rules.
Is each part invoiced?
It depends on agreed invoicing and acceptance terms; separate invoices are not automatic.
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