HowTo

Data Classification: Confidential

Title: Transfer Orders

Abstract: A Transfer Order is used to transfer inventory from one branch to another. The Transfer Order (P4210) program creates both a Sales Order for the shipping branch and a Purchase Order for the receiving branch.
Product Suite Release Document ID Date Created Date Reviewed Date Revised OneWorld Distribution All ODS-02-0066 07/18/2002 07/18/2002 10/27/2003

Table of Contents
Overview Costs Bypassing Accounts Receivable and AAI 4245 Sample Order and Resulting Sales Order and Purchase Order Setup Branch/Plant Constants Customer Billing Instructions Order Line Types Order Activity Rules Sales Transfer P4210 Processing Options Sales Update P42800 Processing Options Branch Sales Markup Table AAI Setup Standard AAI Setup For Sales and Purchasing AAI Setup For A Transfer Order At Cost AAI Setup for A Transfer Order At Cost Plus

Changes to Sales Order or Purchase Order Receipt Routing Cost Differences Journal Entries

Overview
A Transfer Order is used to transfer inventory from one branch to another. The Transfer Order (P4210) program creates both a Sales Order (for the shipping branch) and a Purchase Order (for the receiving branch). Because the default document types created are ST (sales order) and OT (purchase order), a transfer order is often referred to as an ST/OT. Sales Order: By processing the Sales Order through Ship Confirm (P4205) and Sales Update (R42800), the on hand quantity is decremented for the shipping location and write journal entries reducing inventory and increasing an Inventory Intransit account. Interbranch Revenue and Cost of Goods Sold may also be written. Purchase Order: By processing the Purchase Order through Receipts (P4312) and Voucher Match (P0411/P4314), the on hand quantity is incremented for the receiving location and write journal entries increasing Inventory and decreasing the Inventory Intransit account. The Inventory Intransit account then nets to zero.

Costs
When transferring inventory from one branch to another, the inventory item is usually transferred at the cost of the item. The cost of the item may be different within each branch; therefore, the cost used in the transfer is the cost of the item stored in the shipping branch. The shipping branch can also provide a markup on the transfer by using the branch sales markup table (see the Branch Sales Markup Table section below).

Bypassing Accounts Receivable and AAI 4245

Typically, no cash is transferred between branches; therefore, no Accounts Receivable Ledger (F0311) record is needed. In this case, a processing option behind Sales Update (R42800) is set to bypass A/R. This prevents the Accounts Receivable Ledger ( F0311) record from being created when Sales Update is run. Sales Update (R42800) uses AAI 4245 to create balanced journal entries instead of using the financials RC AAI. The G/L Class for this AAI comes from the Customer Master. If the G/L Class in Customer Master is blank, then this AAI must be set up for G/L Class = ****. NOTE: Kit items do not work with Transfer Orders.

Sample Transfer Order

Transferring 10 each of item 220 from Branch 10 to Branch 30. Creates Sales Order 804 ST and Purchase Order 804 OT.

Sales Order created (header only):

On the Sales Order created by Transfer Order Entry (P4210):

The Header Branch/Plant is 10, which is the Ship From Brn (or shipping) branch on the ST/OT. The Ship To Address is the address number from Branch Plant Constants of the Ship To Brn (or receiving) branch on the ST/OT. The Sold To Address is the related address number from the Customer Billing Instructions of the receiving branch on the ST/OT. This is usually the same as the Ship To address.

The Purchase Order Number, Order Type, and Line Number of the related purchase order (the OT) is populated in the details SOE Additional Information on the Additional Info1 tab. To see this information, highlight the detail row and take the SOE Additional row exit.

Purchase Order created (header only):

From Transfer Order Entry, inquire on the ST order, highlight the row, then take the Related PO row exit to quickly access the OT order.

On the purchase order created by Transfer Order Entry (P4210):

The Header Branch/Plant is 30, which is the Ship To Brn (or receiving) branch on the ST/OT. The Supplier Address is the address book number from the Branch Plant Constants of the shipping branch.

The Ship To Address is the address book number from the Branch Plant Constants of the receiving branch.

The Sales Order Number, Order Type, and Line Number of the related Sales Order (the ST) is populated in the Additional Information. To see this information, highlight the detail row and take the Additional Information row exit.
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Setup
Branch/Plant Constants Customer Billing Instructions Order Line Types Order Activity Rules Sales Transfer P4210 Processing Options Sales Update P42800 Processing Options Branch Sales Markup Table

1. Branch/Plant Constants
Each branch must have a valid address book number defined in the Branch/Plant Constants (P41001).

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2. Customer Billing Instructions

The Sold To address on the sales order comes from the related address book number from the Customer Billing Instructions (P03013) of the receiving branch (the Ship To Brn of the ST/OT).

In the example above, Related Address number is set to 1. The related address number will look at the Parent address for this address book number to get the sold-to address. Clicking the Visual assist on Related Address Num field displays:

The Related Address form exit displays the related address numbers set up for this address book record:

In this example the Parent Number is blank, since this address is already setup as a parent address.
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3. Order Line Types

The Line Type for a transfer order must be set up as follows:

G/L Interface set to 'Y' Inventory Interface set to 'Y'

A/P Interface set to 'Y' or 'N'. This can be set up either way; does not control whether an F0411 record is created or not. A/R Interface 'Y'. This must be set to 'Y'. Setting to 'N' creates an out of balance batch that cannot be posted without correction. To bypass A/R, the A/R interface must be turned off in the processing options of Sales Update (R42800).

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4. Order Activity Rules

Order activity rules must be set up for the order type/line type combination for both Purchase and Sales Order Entry. Invoices are usually not printed for Transfer Orders, so this step in Order Activity Rules may be eliminated for Sales Order Processing for an ST order.

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5. Sales Transfer (P4210) processing options

Set the processing options to default the appropriate line type and document type into the resulting sales and purchase orders. If a markup is being applied, make sure that Processing Option #11 on the Process tab of Transfer Order Entry (P4210) is set to 1.

Set all other processing options that apply. One important processing option to check is to make sure that the correct version of Purchase Order Entry (P4310) is set in Processing Option # 8 on the Version tab.

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6. Sales Update (R42800) processing options

Create a special version of Sales Update (R42800) to run for Transfer Orders. Usually the Assign Invoice Number, Final demo version should be copied, since an invoice has not been printed in most cases, and do not change the data sequencing. Processing Options #2 and #4 on the Defaults tab for A/R date and G/L date cannot be set to '2' (Ship Date) if ship confirmation has NOT been performed.

To bypass updating Accounts Receivable, set Processing Option # 2 on the Update tab for Accounts Receivables (F0311) to '1'. This prevents the Accounts Receivable Ledger (F0311) record from being created when the Sales Update (R42800) is run. Sales Update (R42800) will use AAI 4245 to create balanced journal entries instead of using the financials RC AAI at post.

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7. Branch Sales Markup Table

To apply a cost markup to an item when creating a transfer order, the branch sales markup table must be set up. The Branch Sales Markups (P3403) program is on menu G4241. If a markup is being applied, make sure that Processing Option #11 on the Process tab of Transfer Order Entry (P4210) is set to 1.

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AAI Setup
Special setup must be done with AAIs to get the correct account distribution when processing a transfer order. First, look at standard AAI setup and accounting entries (whether accounts are debited or credited) for Sales and Purchase Orders not involving a Transfer Order.

Standard AAI setup for Sales and Purchasing (NOT a transfer order):
Sales AAI Account Debit $XXX $XXX $XXX Purchasing Receipts AAI Account Debit Credit Credit $XXX 4230 Revenue RC Accounts Receivable 4240 Inventory 4220 COGS

4310 Inventory 4320 Received Not Vouchered Voucher Match AAI Account

$XXX $XXX

Debit $XXX

Credit $XXX

4320 Received Not Vouchered PC Trade Payable

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Now look at AAI setup and accounting entries for a transfer order. These can differ depending on whether the item is transferred at cost or is transferred at cost plus a markup. For these examples, A/R will be bypassed by setting Processing Option # 2 on the Update tab for Accounts Receivables (F0311) to '1' in Sales Update (R42800).

AAI Setup For Transferring Inventory At Cost

Sales Receipt Voucher Match Alternative to Voucher Match SALES - Shipping branch If the item is transferred at cost, then Revenue, Accounts Receivable, and Cost of Goods sold may not apply. AAIs for Revenue (4230) and Accounts Receivable Trade (4245) can be netted against each other as shown below. Inventory is credited (reduced) and Inventory Intransit is debited (increased) using the Inventory (4240) and Cost of Goods Sold (4220) AAIs. With A/R bypassed by Processing Option # 2 on the Update tab for Accounts Receivables (F0311) to '1' in Sales Update (R42800), the system uses AAI 4245 (AR Trade) instead of the RC AAI, and creates a batch type of G. No Accounts Receivable (F0311) record is created. Sales AAI 4230 Account Direct this Revenue AAI and the A/R Trade AAI (4245) to the Debit Credit $100

4245 4240 4220

same Suspense account Direct this AR Trade AAI to the same Suspense account as 4230 above Inventory Direct this COGS AAI to Inventory Intransit account

$100 $100 $100

PURCHASING - Receiving branch For the receiving branch, a receipt is processed at the time the goods are physically received. Inventory is debited (increased) and Received Not Vouchered (temporary liability) is credited (increased). Receipt If Voucher Match WILL done AAI 4310 Inventory Account Debit $100 Credit

4320 Received Not Vouchered $100 What to do with the Received Not Vouchered entry? Assuming that payment is not made for the transfer, an offset for this entry needs to be created. The following Voucher Match (P0411/P4314) section shows how. PURCHASING - Voucher Match By processing a Receipt (P4312), an open amount to voucher is created. If a voucher is created, create the voucher the following way: Inquire on the Purchase Order in the Voucher Match (P0411/P4314) program . Add a negative line for the same quantity and dollar amount as the original line (only negative), keying the Inventory Intransit account number on the new line in place of the original item:

Voucher match both lines. This creates an Accounts Payable Ledger (F0411) record for $0. (There is no way to prevent an Accounts Payable Ledger (F0411) record from being created when processing a voucher). The Trade Payable account nets to zero.

The credit to Inventory Intransit from the added expense line offsets the debit created by sales update and nets to zero. Voucher Match AAI 4320 PC Account Received Not Vouchered Trade Payable Added Negative Line (none) Inventory Intransit PC Trade Payable $100 $100 Debit $100 $100 Credit

Alternative to Voucher Match If you dont intend to voucher match after receipt, the Received Not Vouchered AAI can be directed to the Inventory Intransit account at the time of receipt. This offsets the entry to the Inventory Intransit account debited at sales update by AAI 4220: Receipt if Voucher Match Will Not Be Done AAI 4310 4320 Inventory Inventory Intransit Account Debit $100 $100 Credit

With this setup, the accounting is fine, but the Receipt (P4312) creates a Purchase Order Receiver (F43121) match type 1 record. This shows up in Open Receipts by Supplier (P43214). The Purchase Order Receiver ( F43121) file can manually be updated through the database so no further processing will be allowed by changing the value in field Match Type (MATC) from 1 to 5. Match Type 5 is not a value that is created by JDE OneWorld Software, and therefore will not be processed. Also, by identifying the record as a match type 5, the record stays in tact and can easily be changed back to a Match Type 1 record if the receipt needs to be reversed.

AAI Setup for Transferring Inventory At Cost Plus

The shipping branch may want to charge the receiving branch a fee for transferring the inventory. If a markup is being applied, make sure that Processing Option #11 on the Process tab of Transfer Order Entry (P4210) is set to 1. The accounting entries for Sales Order Processing may be impacted by this change. The shipping branch may want to write Interbranch Revenue and Cost of Goods Sold as a result of the transfer.

AAI Setup for a Transfer at a Cost Of $100 Plus 10%: Sales AAI 4230 Interbranch Revenue 4220 COGS 4240 Inventory 4245 Direct this A/R Trade AAI to the Inventory Intransit account Purchasing Receipts AAI 4310 Inventory Voucher Match AAI 4320 Received Not Vouchered PC Trade Payable Added Negative Line (none) Inventory Intransit PC Trade Payable $110 $110 Account Debit $110 $110 Credit 4320 Received Not Vouchered Account Debit $110 $110 Credit $100 $100 $110 Account Debit Credit $110

If the Voucher Match (P0411/P4314) process will not be performed, use the same process as described above in Alternative to Voucher Match to void the receipt record.
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Changes To Sales Order Or Purchase Order

The ST, or Sales Order created from a Transfer Order, and the OT, or Purchase Order created from a Transfer Order, are connected by the Related Order Number, Order Type, and Line Number stored in the ST. This is a one-way connection in that changes to the ST are reflected on the OT, but changes to the OT are not reflected on the ST. More specifically: Changes made to existing lines on the ST with P4210 are reflected on the OT. Changes made to existing lines on the OT with P4210 or P4310 are not reflected on the ST. Lines added to the ST with program P4210 are added to the OT.

Receipt Routing
Receipt routing can be used to track inventory that is in transit from one branch to another. After the branch processing the sales order has shipped the goods, they can notify the receiving branch. The receiving branch can process the Receipt (P4312) and use the receipt routing process to track the goods in a receipt routing operation (TRAN). When the goods are physically received, they can be moved into stock (STK). When the receipt batch is posted, the appropriate journal entries are written.
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Cost Differences Between Branches

If items are stored within a branch in multiple locations with different costs, this could cause a problem with Transfer Orders if the item is soft committed at the time of Transfer Order Entry (P4210). The cost at order entry will be the cost stored at the primary location. When the item is hard committed, either at pick slip or ship confirm, and the cost is different within the location it is allocated to, the sales order is changed to reflect the different cost but the purchase order is not. If this happens the purchase order will need to be manually changed. If it is not changed, the Inventory Intransit Account will not net to zero.

A manual override of a cost (price) at the time the Transfer Order is entered will prevent the problem from occurring.

Journal Entries
Following are journal entries created for the transfer order example at the beginning of this paper. A/R was bypassed, and the purchase order was received and vouchered. Sales journal entries were created by running Sales Update and posting the G batch. Purchasing journal entries are created by posting the receipt and voucher batches. The AAI setup is: AAI 4220 4230 4240 4245 4310 4320 RC PC Description COGS Revenue Inventory AR trade Inventory Received Not Vouchered Accounts Receivable Accounts Payable Company Doc Type 00001 ST 00001 ST 00001 ST 00001 ST 00001 OT 00001 OT 00001 00001 G/L Class IN10 IN10 IN10 **** IN10 IN10 Account 10.6020 10.5050 1.1411 30.6200 1.1411 1.4111 1.1210 1.4110

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Note:

There is no invoice amount A/R was bypassed by setting Processing Option # 2 on the Update tab for Accounts Receivables (F0311) to '1' in Sales Update (R42800). A G batch was created (there are no customer sales). The A/R Suspense account came from AAI 4245. The G/L Class came from the Customer Master record. For customer 1063 (Branch 30), the G/L class was blank, so AAI 4245 used the account for 00100 ST ****.

Results of posting this batch:

Journal entries created at receipt of OT:

Voucher match - add line:

Journal entries created at voucher match:

Note: The added line is a credit to the Prime Cost of Goods account that was debited at sales update (by AAI 4245), netting this account to $0.