Managing Intercompany Inventory Transfers - Arm's Length

The Automated Intercompany Management feature lets you manage and coordinate arm's length intercompany inventory transfers including intercompany drop ship orders. With this feature you can:

Automated Intercompany Management supports month end elimination for arm's length and non-arm's length intercompany inventory transfers.

Key Points for Intercompany Inventory Transfers

  • For arm's length intercompany inventory transfers, returns, and drop shipments, the item rate or transfer price must be the same on all transactions.

  • You cannot modify the originating transaction (purchase order or vendor return authorization) when you generate the intercompany sales order or return authorization.

  • For arm's length intercompany inventory transfers, the Use Item Cost as Transfer Cost preference must be disabled.

  • The currency for all transactions created for intercompany inventory transfers and drop shipments is always the base currency of the purchase order. The base currency of the purchase order eliminates the need for foreign currency revaluation for the transactions at period end close.

  • Ownership of the item transfers from the source subsidiary to the destination subsidiary when the order is fulfilled.

  • The quantity received cannot be greater than the quantity shipped.

  • There is a one-to-one relationship between the intercompany purchase order and the intercompany sales order. There is a one-to-one relationship between the intercompany vendor return authorization and intercompany return authorization.

  • You cannot generate multiple sales orders for one intercompany purchase order. You cannot generate one sales order for multiple intercompany purchase orders.

  • You must generate an intercompany sales order using the Manage Intercompany Sales Orders page for an order with an intercompany vendor and an inventory item. You cannot manually create an intercompany sales order.

  • You must generate an intercompany return authorization for a return authorization with an intercompany vendor and an inventory item. Use the Manage Intercompany Return Authorization page to do this. You cannot manually create an intercompany return authorization.

    The return process for an intercompany inventory transfer reverses the original transfer transaction. It originates when the subsidiary that purchased the item (the original destination subsidiary) creates a vendor return authorization for the original purchase order. The original source subsidiary (the subsidiary that sold the item) cannot create a credit memo to initiate the return of an intercompany inventory transfer. Instead, the source subsidiary automatically generates a return authorization for the vendor return authorization. Then, each subsidiary completes their part of the return process. NetSuite does not process changes made to any line.

Note:

For arm's length intercompany inventory transfers, intercompany clearing accounts are not returned to zero when you eliminate intercompany transactions at period end close. Reporting at the subsidiary level displays the intercompany clearing account with an accumulated balance.

Related Topics:

Intercompany Inventory Transfer Examples
Intercompany Inventory Reports
Automated Intercompany Management Overview
Intercompany Preferences
Setting Up Automated Intercompany Management
Intercompany Sales and Billing Transactions Overview
Managing Intercompany Inventory Transfers - Arm's Length
Intercompany Elimination Overview
Elimination Through the Automated Intercompany Management Feature
Working with Elimination Reports
Automated Intercompany Management

General Notices