Record In-Transit Inventory and Expense for External Purchases

Use the Record In-transit Inventory and Expense for External Purchases process to compute the in-transit value and create new transactions and distributions for recording in-transit inventory or expense for purchase order based shipments.

You can generate in-transit accounting for inbound purchase order shipments using an advanced shipment notice (ASN) in standard purchasing and global procurement flows. The process considers the information listed here to compute the in-transit value for each purchase order schedule and shipment line combination:

• ASN Data: All valid ASNs in expected or partially received status for open purchase orders.

• Purchase Order: All open purchase orders for accrue at receipt purchases (except consignment).

The in-transit amount is computed by multiplying the net shipment quantity with the sum of the purchase order price and nonrecoverable tax. The net shipment quantity is arrived at by deducting the receipt quantity for the purchase order schedule from the shipment quantity on the ASN.

After goods are received, the in-transit inventory or expense is reversed when you next run the process.

The process, when run in the Accounting mode, creates transactions and accounting distributions for each purchase order schedule and shipment line combination. You can view them on the Review Receipt Accounting Distributions page. The journal entries are created when you run the Create Accounting process and can be viewed in the Journal Entries tab of the Review Receipt Accounting Distributions page.

The process also automatically generates the Period In-transit Inventory Valuation Report for Purchase Orders, which can be used to view:

• Summary in-transit value by inventory organization

• Detailed in-transit information for each purchase order schedule and shipment line

Note:

Valid ASNs are determined based on the In-transit Valuation Ownership Change Rules set up by you for each FOB lookup code. The In-transit Valuation Ownership Change Rules can be set up using REST API for each FOB lookup code to determine which event (ASN or Receipt) is considered as an ownership change event for recording in-transit inventory or expense. The FOB lookup code setup on the purchase order is automatically defaulted on the ASN shipment line, which you can override before submitting the ASN.

When to Use

You can run the process on demand multiple times during the month to have an up to date view of in-transit valuation. You can run the process in the Report mode or the Accounting mode.

• Report mode lets you view in-transit value at any point of time based on latest and greatest purchase order and shipment information and not create accounting distributions. This helps you avoid creation of additional transactions and distributions in cases where shipments and receipts are likely to be recorded in the same accounting period. This is also useful when want to perform in-transit accounting for external purchases only at the end of the month but want a near real time view of in-transit value.

• Accounting mode creates new set of transactions and accounting distributions in Receipt Accounting every time the process is run. Accounting date for these transactions is always derived as the last date of the period.

  You must run the process in the Accounting mode at least once at the end of the period to ensure that in-transit value is correctly accounted as of the end of the period.

The process is always run in the context of an accounting period and you must run it in a gapless fashion, period after period, after the first run. Also, you can't run this process for a previous period if this process has been run in a later period in the Accounting mode.

Note:

Avoid running this process in the Accounting mode on a schedule.

Privileges Required

• Record In-Transit Inventory and Expense for External Purchases (CMR_RECORD_INTRANSIT_INVENTORY_PURCHSE_ORDER_PRIV)

Specifications

Review the following before setting up this process:

Specification	Description
Job Type	Ad hoc job/on demand.
Frequency	You can run the process in the Report mode on demand multiple times during the month to have an up to date view of in-transit valuation. You must run the process in the Accounting mode at least once at the end of the period to ensure that in-transit value is correctly accounted as of the end of the period. You should avoid scheduling this process more frequently than necessary for your business purposes and on a frequency that might overlap. Also, avoid scheduling the process in the Accounting mode. Ensure that you maintain a lag between the end of a scheduled process and the start of the next scheduled process.
Time of Day	Any time.
Duration	Runtime of this process will vary based on the number of transactions in the period.
Compatibility	The process is designed to automatically detect incompatibilities and will gracefully branch around the incompatibility, log errors, and exit when necessary. However, it's highly recommended to schedule the processes in such a way as to avoid overlapping process runs.

Parameters

Parameter	Optional or Required	Description	Parameter Value	Special Combinations Required	Notes
Bill to Business Unit	Required	You can run the process for a specific Bill to Business Unit. The application intelligently processes the data for only those profit center business units of the Bill to Business Unit to which you have data access and have pending transactions to be processed.	Bill to Business Unit name	N/A	If you don't have data access to the selected Bill to Business Unit, the process ends with Warning status.
Destination Type	Required	You can run the process for Inventory or Expense destinations or both	Inventory (default) Expense Both	N/A	N/A
Run Option	Required	The mode in which the process must be run. When you run the process in the Accounting mode, transactions and accounting distributions are created and ready to be posted to the General Ledger.	Report (default) Accounting	N/A	You must run the process in the Accounting mode at least once at the end of the period.
Accounting Period	Required	The accounting period for which you want to run the process.	Period name	N/A	N/A
Commit Limit	Optional	Use the commit limit to fine tune the size of processing sets. The default setting is sufficient for most typical cases.	Number	N/A	N/A

Troubleshooting Information

• You can view the status of the process in the Scheduled Processes work area.

• Error and warning messages encountered while running the process are displayed in the process log file.

• When the process is submitted, you can Resubmit, Put on Hold, Cancel Process, Release Process as provided by the Scheduled Processes work area.

• To run the process, you must have data access to the appropriate Business Unit. If you don't have data access, the process ends with a Warning status.

Tips and Considerations

Here are some considerations for configuring the ownership change rules using REST API:

• Set up ownership change rules for each FOB lookup code expected to be used on the purchase order and ASN.

• The process will fail if it doesn't find at least one ownership change rule for an FOB lookup code used on the purchase order and ASN.

• ASNs with FOB lookup codes not configured in In-transit Ownership Change Rules are ignored by the process and aren't picked up by subsequent runs of the process.

• ASNs that have FOB lookup code with ownership change event set to Receipt are ignored and in-transit inventory isn't created for such ASNs.

• FOB lookup codes are defined in procurement setup and can be entered in Purchase Order header.

Note:

Refer the REST API for Oracle Fusion Cloud SCM guide: Purchase Order In-transit Valuation Ownership Change Rules (/intransitValuationOwnershipChangeRules) for the API details.

With reference to this process, you must note the points listed here:

• Using an ASN is a prerequisite for this process. In addition, you must receive against the ASN to ensure that any quantity received reverses the in-transit originally booked against the ASN when the process is run later.

• If there are retroactive price updates after in-transit is recorded but before receipt, additional distributions are created for in-transit amount based on shipment quantity and delta price change on the purchase order.

• You can close (closed for receiving, closed for invoicing, closed, final close) the purchase order to also reverse in-transit amounts if you aren't expecting any further receipts against an ASN in expected or partially received status.

• Ensure that the subledger accounting setup (mapping sets, account rules) is complete for the new event type. You can modify the seeded mapping set and account combination rules based on your business requirements

Also, make a note of some of the period close best practices.

• Review any aged in-transit amounts and take necessary actions to clear (by receiving remaining quantity or closing the PO).

• Before closing period ensure that in-transit amount is equal to distributions amount which is equal to the accounted amount to avoid reconciliation issues.

  • If in-transit amount isn't equal to distributions amount, run this process in the Accounting mode.

  • If distributions amount isn't equal to accounted amount, run the Create Accounting process and ensure that there are no accounting errors.

• Run the Run Receipt Accounting Period End Validation process to identify any open items before closing the period:

  • Uninterfaced In-transit Shipment Count: The count of ASN shipment lines that haven't been processed for in-transit valuation.

  • Unaccounted In-transit PO Count: The count of ASN shipment lines for which distributions haven't been created.

  • Pending In-transit Reversals Count: The count of receipts against ASNs that haven't been processed to reverse in-transit accounting to the extent of receipt quantity.

  • The Record In-transit Inventory and Expense for External Purchases schedule process wasn't run in the accounting mode for the period.