Inter-Organization Transfers
You can transfer items directly from one organization to another, or you can transfer items through intransit inventory. Intransit inventory represents inventory items that has not yet arrived at the receiving organization.
Using Intransit Inventory
You can move items from the shipping organization to intransit inventory using the Interorganization Transfer window. You can use the Receipts window to move items from intransit inventory to the receiving organization.
Shipment Transactions
The Free on Board (FOB) point influences the accounting entries generated for the shipment to intransit inventory. The FOB point is determined by how the interorganization shipping network in defined in the Shipping Networks window. Shipments to intransit inventory create the following accounting entries:
When the FOB point is receipt:
| Intransit Inventory accounts
| Sending
| XX
|
|
| Organization Valuation accounts
| Sending
|
| XX
|
When the FOB point is shipment:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Organization Valuation accounts
| Sending
|
| XX
|
| Intransit Inventory Material account
| Receiving
| XX
|
|
| Inter-Organization Payable
| Receiving
|
| XX
|
Receipt Transaction
The FOB point influences the accounting entries generated for the shipment to intransit inventory. The FOB point is determined by how the interorganization shipping network in defined in the Shipping Networks window. Receipts from intransit inventory create the following accounting entries:
When the FOB point is receipt:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Intransit Inventory accounts
| Sending
|
| XX
|
| Org. Inventory Material account
| Receiving
| XX
|
|
| Inter-Organization Payable
| Receiving
|
| XX
|
When the FOB point is shipment:
| Org. Inventory Material account
| Receiving
| XX
|
|
| Intransit Inventory Material account
| Receiving
|
| XX
|
In addition to accounting for the movement of the items, these transactions also update the interorganization receivable and payable accounts. These interorganization clearing accounts represent interorganization receivables and payables for the respective shipping and receiving organizations.
Material Overhead and Inter-Organization Transfers
If your item has material overhead(s), you can earn material overhead in the receiving organization as part of the receipt transaction.
| Organization Material Overhead account
| XX
|
|
| Material Overhead Absorption account
|
| XX
|
Direct Inter-Organization Transfer
You use the Interorganization Transfer window for direct transfers. When your the interorganization relationship is set to direct transfer in the Shipping Networks window, an issue and receipt transaction are performed in one step. In addition, each organization may be in a different set of books and even in a different currency. The accounting entries created are as follows:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Org. Inventory Valuation accounts
| Sending
|
| XX
|
| Org. Inventory Valuation accounts
| Receiving
| XX
|
|
| Inter-Organization Payable
| Receiving
|
| XX
|
Freight and Transfer Charges
The FOB point changes the accounting for freight. With FOB is receipt, freight is accrued on the receipt transaction by the sending organization. With FOB is shipment, freight is accrued on the shipment transaction by the receiving organization. For direct transfers, the receipt and shipment transaction occur at the same time.
When the FOB point is receipt, the transfer creates the following accounting entries for freight and transfer charges:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Freight Expense account
| Sending
|
| XX
|
| Inter-Organization Receivable
| Sending
| XX
|
|
| Inter-Org. Transfer Credit
| Sending
|
| XX
|
| Org. Material account
| Receiving
| XX
|
|
| Inter-Organization Payable
| Receiving
|
| XX
|
For the receiving organization, the interorganization payable account is increased for freight and transfer charge. These charges are included in the organization material account.
When the FOB point is shipment, the transfer creates the following accounting entries for freight and transfer charges:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Inter-Org. Transfer Credit
| Sending
|
| XX
|
| Intransit Inventory Material account
| Receiving
| XX
|
|
| Freight Expense account
| Receiving
|
| XX
|
| Inter-Organization Payable
| Receiving
|
| XX
|
Intransit includes both the freight and transfer charges. Interorganization payable is only increased for the transfer charge.
Expense Subinventories and Expense Inventory Items
When you receive an interorganization transfer into an expense location or receive an expense inventory item, you have expensed the item and cannot directly issue it. The system assumes the item is consumed at the expense location.
Using the direct or intransit method, you can receive items to an expense subinventory or receive an expense item. When you receive to expense locations or receive expense items, the subinventory expense account is debited for the receiving organization, instead of the organization material account. The subinventory expense account is charged the total transaction value from the other organization.
Inter-Organization Transfers and Sets of Books
You can transfer items directly from one organization to another regardless of their set of books and even if the currency is different. You cannot, however, use the transfer items through intransit inventory if you are using multiple sets of books. These transactions use receiving functions from Purchasing, which only supports one set of books. To perform an interorganization intransit transfer from one set of books to another, you need to perform a combination of two transactions, a direct transfer and an intransit transfer.
See Also
Defining Inter-Organization Shipping Networks
Transferring Between Organizations
Managing Receipts
