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:

Account Organization Debit Credit

Intransit Inventory accounts Sending XX

Organization Valuation accounts Sending XX

When the FOB point is shipment:

Account Organization Debit Credit

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:

Account Organization Debit Credit

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:

Account Organization Debit Credit

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.

Account Debit Credit

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:

Account Organization Debit Credit

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:

Account Organization Debit Credit

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:

Account Organization Debit Credit

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.

efining Inter-Organization Shipping Networks

Inter-organization shipping network information describes the relationships and accounting information that exists between a shipping (from) organization that ships inventory to a destination (to) organization.

Depending on the function security assigned to your responsibility, you can define a shipping network between the current organization and another organization or between any two organizations. The function security assigned to your responsibility determines whether you have the ability to define shipping networks for all organizations or just the current organization. See: Overview of Function Security.

To define shipping network basic information:

1. Navigate to the Shipping Networks window.2. Determine if the organization displayed is the To Organization, From Organization, or the From or To Organization.

Note: If your function security allows multiple organization access, you can enter any organization. Otherwise, the Organization field is display only.

3. To define a new shipping network for the current organization choose New Record from the Edit menu. To enter a new record in a single-row window choose the New button.To find existing shipping network information for the current organization choose Find.4. Select the Main alternative region.5. Enter the shipping or From organization.6. Enter the destination or To organization.7. Enter the transfer type:Direct: Inter-organization transfers move inventory directly from the shipping organization to the destination organization.Intransit: Inter-organization transfers move inventory to intransit inventory first. You can track this inventory until it arrives at the destination organization.8. If you selected Intransit in the Transfer Type field, select the FOB terms:Receipt: The shipping organization owns the shipment until the destination organization receives it.Shipment: The destination organization owns the shipment when the from organization ships it (and while the shipment is in transit).9. If you selected Intransit in the Transfer Type field, select a receipt routing option:Standard: Receive this item first, then deliver without inspection.Direct: At receipt, deliver this item directly to its location.Inspection: Receive this item first, inspect it, then deliver.

10. Indicate whether an internal order is required for each transfer.11. Save your work.

To define transfer charge information:

1. Select the Transfer, Distance alternative region.2. Select the inter-organization transfer charge type for calculating transfer charges:None: Do not add transfer charges.Predefined Percent: Automatically add a predefined percent of the transaction value.Requested Value: Enter a discrete value to add.Requested Percent: Enter a discrete percentage of the transfer value to add.The default value is the value you defined in the Organization Parameters window for the shipping organization. See: Defining Organization Parameters.3. If you selected Predefined Percent in the Transfer Charge Type field, enter the percentage value to add to a material transfer. For example, a value of 10 equals a transaction value of 10%.The default value is the value you defined in the Organization Parameters window for the shipping organization. See: Defining Organization Parameters.4. Optionally, you can define the following:

o Enter the unit of measure for the distance from the shipping organization to the destination organization.

o Enter the distance value (in the unit of measure) from the shipping organization to the destination organization.

To define account information:

1. Select the Primary Accounts alternative region.2. Enter the general ledger transfer credit account used to collect transfer charges for the shipping organizationThe default value is the value you defined in the Organization Parameters window for the shipping organization. See: Defining Organization Parameters.3. Enter the general ledger account used to collect the purchase price variance for inter-organization receipts into standard cost organizations. You must enter an account if your receiving organization is using standard costing.

To enter additional account information:

1. Select the Secondary Accounts alternative region.

Note: The default values for the following fields are the values you defined in the Organization Parameters window for the shipping and destination organizations. See: Defining Organization Parameters.

2. Enter the general ledger receivables account used as an inter-organization clearing account for the shipping organization. The inter-organization receivable account for the shipping organization should equal the inter-organization payables account for the receiving organization.3. Enter the general ledger payables account used as an inter-organization clearing account for the receiving organization. The inter-organization receivable account for the shipping organization should equal the inter-organization payables account for the receiving organization.

To enter intransit account information

1. Select the Intransit Account alternative region.2. Enter the general ledger account used to hold the intransit inventory value.

To enter intransit lead time for shipping methods:

1. Select Shipping Methods on the Special menu to open the Inter-org Shipping Methods window.2. Enter the shipping method for which you want to associate an intransit lead time for the displayed from and to organizations. See: Defining Shipping Methods.3. Enter the intransit lead time in days.4. Save your work.