Inter - Org & Shipping Networks
Inter - Org & Shipping Networks
Inter - Org & Shipping Networks
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.
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:
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:
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.
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
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:
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.
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.
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.
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.
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.
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.