Inter-Organization Transfers
You can transfer material from one inventory organization to another either directly or through intransit inventory. Intransit inventory represents material that has not yet arrived at the receiving organization. See: Defining Inter-Organization Shipping Networks.
Using Intransit Inventory
You can move material from the shipping organization to intransit inventory using the Transfer Subinventories window. You can use the Receipts window to move material from intransit invenotry to the receiving organization.
Issue Transaction
Depending upon the Freight On Board (FOB) point defined in the inventory organization relationship, the shipment to intransit inventory creates the following accounting entries:
FOB Point is set to Receiving:
| Intransit inventory account
| Sending
| XX
|
|
| Subinventory accounts
| Sending
|
| XX
|
FOB Point is set to Shipment:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Subinventory accounts
| Sending
|
| XX
|
| Intransit Inventory account
| Receiving
| XX
|
|
| Inter-Organization Payable
| Receiving
|
| XX
|
Receipt Transaction
Depending upon the FOB point defined in the organization relationship, the receipt from intransit inventory creates the following accounting entries:
FOB Point is set to Receiving:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Intransit Inventory account
| Sending
|
| XX
|
| Subinventory accounts
| Receiving
| XX
|
|
| Inter-Organization Payable
| Receiving
|
| XX
|
FOB Point is set to Shipment:
| Subinventory accounts
| Receiving
| XX
|
|
| Intransit Inventory account
| Receiving
|
| XX
|
In addition to accounting for the movement of the material, these transactions also update the inter-organization receivable and payable accounts. These inter-organization clearing accounts represent inter-organization receivables and payables for the respective shipping and receiving organizations.
Direct Inter-Organization Transfer
When your organization relationship is set to directly transfer material, Inventory performs both the issue and the receipt transaction at the time of the issue. Any difference between the cost of items in the two organizations is recognized as variance in the receiving organization. The accounting entries created are as follows:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Subinventory accounts
| Sending
|
| XX
|
| Subinventory accounts
| Receiving
| XX
|
|
| Inter-Organization Payable
| Receiving
|
| XX
|
Use the Transfer Subinventories window for direct transfers.
Material Overhead and Inter-Organization Transfers
If your item has material overhead(s), you earn material overhead on inter-organization transfers. The subinventory entry is increased for the material overhead with a credit to the material overhead absorption account(s) in the receiving organization.
| Subinventory accounts
| XX
|
|
| Material Overhead Absorption account
|
| XX
|
Attention: The subinventory account is combined with the above entry. The material overhead absorption transaction adds one additional account to the entry.
The FOB Point changes the accounting for freight. With FOB receiving, freight is accrued on the receipt transaction by the sending organization. With FOB 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 set to Receiving, the transfer creates the following freight and transfer charge entries at time of receipt:
| 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 inter-organization payable account is increased for freight and transfer charges. These charges are included in the comparison to the standard cost.
When the FOB Point is set to Shipment, the transfer creates the following freight and transfer charge entries at shipment:
| Inter-Organization Receivable
| Sending
| XX
|
|
| Inter-Org. Transfer Credit
| Sending
|
| XX
|
| Intransit Inventory account
| Receiving
| XX
|
|
| Freight Expense account
| Receiving
|
| XX
|
| Inter-Organization Payable
| Receiving
|
| XX
|
Intransit inventory includes both freight and transfer charges. The inter-organization payable is only increased for transfer charges.
Expense Subinventories and Expense Items
When you receive an inter-organization transfer into an expense subinventory or receive an expense inventory item, you have expensed the material and cannot directly issue it. The system assumes the material cost is consumed at the expense location.
Using the direct or intransit method, you can receive material to an expense subinventory or receive an expense inventory item. When you receive to expense locations or receive expense inventory items, the subinventory expense account is debited for the receiving organization, instead of the valuation accounts. The subinventory expense account is charged the total transaction value from the other organization.
Inter-Organization Transfers and Sets of Books
The Inter-Organization Direct Transfer transaction also supports transfers from any set of books, even if the currency is different. However, you cannot use the Inter-Organization Intransit with multiple sets of books. These transactions use receiving functions from Purchasing, which only supports one set of books. To perform an inter-organization 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
