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 organization
The 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.