Understanding the Types of Interunit Transfers

When you maintain warehouses and plants all over the world, you must be able to transfer goods among these locations and account for transfer prices, costs, currency changes, taxes, and invoicing for business units involved in the transfer. In PeopleSoft Inventory, a transfer of stock between two inventory business units is known as an interunit transfer. There are three approaches to interunit transfers:

Term	Definition
Interunit transfer using an intransit account only	The transfer price of the inventory stock is entered into an intransit account while it is moved from one inventory business unit to another. This approach can be used when both inventory business units post to the same general ledger (GL).
Interunit transfer with interunit receivables and interunit payables accounts	An intransit account is used along with interunit accounts receivable (AR) and interunit accounts payable (AP) accounts recorded for each inventory business unit. Both inventory business units post to different GL business units. This approach can be used when transferring stock between separate legal entities or within the same legal entity.
Interunit sales approach (intercompany)	An intercompany sale is recorded with the source inventory business unit recording a sale and the linked billing business unit issuing an invoice for the stock transfer to the receiving business unit's payable unit. This approach can be used when transferring stock between separate legal entities or within the same legal entity. Intercompany is required if the (GL) business units are using different currencies.

This diagram illustrates the flow of an interunit transfer using only an intransit account.

If the inventory business units transferring stock are linked to the same GL business unit, the system does not generate any affiliate interunit transactions. The intransit account must be defined as belonging to the source or destination business unit.

This diagram illustrates the flow of an interunit transfer with interunit receivables and interunit payables accounts when the source unit owns the intransit stock.

In a transfer for which the inventory business units are linked to two GL business units that may be part of the same legal entity, entries are recorded in the interunit receivables and payables accounts. Affiliate accounting is used, and the interunit receivables affiliate and interunit payables affiliate entries should equal each other.

This diagram illustrates the cost flow of an intercompany sales transaction.

In an intercompany transfer, the inventory business units transferring stock want to transfer inventory in an "arm's length" manner. In this case, an intercompany sale is recorded. The destination inventory business unit must be defined as a customer and the source GL business unit must be defined as a supplier. The billing business unit linked to the source inventory business unit performs the additional tasks of calculating value-added taxes (VAT), invoice generation, legal shipping documentation, accounting line creation, and voucher initiation. The AP voucher is recorded in the interface tables of the destination payables business unit, where it can be processed and paid.