Using Inter-Company Transfers
Inter-Company Transfers (ICT) are used to move inventory from one Facility to another, within the company. Using ICTs, rather than an inventory move, allow paperwork like pick lists and Bills of Lading to be printed and can account for material in transit as well as material lost in transit.
Configuration
ICTs require the same items as detailed in Entering Sales Orders as well as the following:
At least two Facilities - the Sending Facility and the Transfer Facility. Sending Facilities can be any active Facility. Transfer Facilities, however, must have the "Allow inter-co transfers to this Facility" box checked off. Also set on the Transfer Facility is the "IC Xfer Markup Type". The Sending Facility will receive any Markup as defined on the Receiving Facility. A Markup Factor of 0% will transfer the material at cost. A list of the Markup Types as well as additional information on the Facility record is available via Inventory > Maintenance > Facilities.
Ship-to Companies must include a "Transfer Facility" on the Order Defaults tab. During order entry the system checks this "Transfer Facility" field. If a Facility is found here, the system automatically changes the Order Type to Inter-company Transfer.
Change ICT Facility Security (Optional) -
Two required accounts must be entered in Accounting > Options on the Accounts Receivable tab:
Inter-Company Transfer Account - Asset Account to be charged during the time when materials are in transit from one Facility to another via an Inter-company Transfer type of Sales Orders. Upon receipt, the full cost of shipped material leaves the Inter-company Transfer Account.
Transfer Variance Account - Expense Account that will be charged when the Receiving Facility receives a quantity different that the quantity shipped. Upon receipt, the difference between the costs of shipped and received material is charged to the Transfer Variance Account.
Process
Creating the Sales Order
Users have two options to enter an Inter-Company Transfer:
Entering Sales Orders Using the Order Entry Function - In this option, the "Transfer Facility" from the Ship-to Order Defaults tab is the Receiving Facility, and the "Facility" on the order header is the Shipping Facility. When the Ship-to is selected, the Order Type will automatically change to Inter-Company Transfer because the Ship-to has a "Transfer Facility" defined.
Using MRP - In this option, users select a Facility in the "Facility" field on the MRP pre-filter, and then use the “Create IC Xfer” or "Auto IC Xfer" buttons in MRP to put selected items on Inter-Company Transfer orders. When using either button, users may select the appropriate Ship-To Company and shipping Facility. The quantity on the transfer is set to reach the maximum inventory quantity. The values in the "SO Quantity", "Minimum Saleable", and "Incremental SO Quantity" fields on the Item Master or Customer Part Cross References, if populated, are enforced on the Inter-Company Transfer.
Transferring At-Risk Inventory
In DEACOM, inventory may be marked with an At-risk Quality Control status when it is Received or Produced. Additional information on the at-risk option is available via Managing At-Risk Inventory. If inventory that is marked At-risk is shipped on an Inter-company Transfer, the system will allow QC tests to be performed in the Receiving Facility. In this case the entry and approval of QC results is handled via Production > QC Result Entry. This option is designed to be used in connection with the header Job functionality. In this way, a header Job is created for an Inter-company Transfer order, the Job will contain the appropriate Bill of Material with the Quality Control Group identified and marked to "Finish at-risk". When the Inter-company order is received, the entry of QC results is accomplished on the header Job via the Production > QC Result Entry transaction. This option was initially designed for use in situations where items would be produced and transferred to another Facility within the same company before the entry of QC results could be accomplished.
Retaining Ownership
Sales Orders can be shipped to an In-transit bucket until received by the customer. There is not a specific Order Type for this scenario but the process is very similar to the Inter-company Sales Order process. The key to the process is the "Retain Ownership While In-Transit" flag on the Freight Type via Purchasing > Maintenance > Freight Types. If that flag is marked as true, it indicates that the shipper will retain ownership until the order is received by the customer. For Sales Orders using Freight Types marked as "Retain Ownership", the system will treat the order like an Inter-company Transfer. In this case, the order will be shipped, and must then be received via Sales > Receive In-Transit. When the order is shipped, it is placed into an In-transit inventory bucket. To use this process, items will need to contain an entry in the "In-transit" field of the Accounts tab on the Item Master record. This is required because when shipping the order, postings will need to hit the In-transit Account and not the COGS Account associated with the item's Revenue Account. Sales Orders cannot be invoiced when In-transit. When the order is received, the GL postings will then hit the appropriate COGS/Revenue Accounts.
Shipping and receiving the Order
An ICT is processed and shipped in the same manner as a regular Sales Order. The only difference is that for an ICT, the Receiving Facility must do a receiving transaction when the shipment arrives via Sales > Receive In-Transit. For more shipping and receiving information, refer to Shipping and Receiving Inter-Company Transfers.
Configuring GL accounts
The following fields impact how Inter-company Transfers hit the GL.
Inter-company Transfer Account (Accounting > Options > Accounts Receivable tab) – Asset account to be charged during the time when materials are in transit from one Facility to another via Inter-company Transfers.
Transfer Markup Account (Accounting > Options > Accounts Receivable tab) – This account is necessary if including Markups on transfers and defines the account, usually an Expense account, that will be hit when the Receiving Facility marks up an item on a transfer. Markups are generally included to cover the expected cost of the transfer.
Transfer Variance Account (Accounting > Options > Accounts Receivable tab) – Expense Account that will be charged on an Inter-company Transfer when the Receiving Facility receives a quantity different than the quantity shipped by the Shipping Facility. Upon receipt, the full cost of the shipped material leaves the Inter-company Transfer Account, the cost of received material enters the Receiving Facility’s inventory and the difference goes to the Variance Account.
Recognize Revenue on Cross-Facility Transfer flag (Accounting > Options > Accounting Receivable tab) – f checked, the shipping Facility on Sales Orders with an "Order Type" of "Cross-Facility" will be credited for the cost of goods sold plus the (1) "IC Trans. Markup %" defined on the Item Master General 2 tab and the (2) combination of the "IC Xfer Markup Type" selection and "Markup Factor" on the selling Facility Sales tab.
Recognize Revenue on Inter-Company Transfer flag (Accounting > Options > Accounting Receivable tab) –f checked, the shipping Facility on Sales Orders with an "Order Type" of "Cross-Facility" will be credited for the cost of goods sold plus the (1) "IC Trans. Markup %" defined on the Item Master General 2 tab and the (2) combination of the "IC Xfer Markup Type" selection and "Markup Factor" on the selling Facility Sales tab.
Notes:
The Facility Elimination Account will also need to be set in the System Options for this behavior.
Note: Inter-company Transfers can also make Facility elimination postings. If a Facility Elimination Account is specified in Accounting > Options > Accounting Receivable tab, receiving an Inter-company Transfer will make a Facility elimination posting.
Reporting on Inter-Company Transfers and transferred Lots
Sales > Order Reporting and Inventory > Inventory Reporting provide visibility to what Inter-company Transfers and Lots are in the system. For information on how to configure and generate reports, refer to Inventory Flow and Reporting.
Additional Notes on Inter-Company Transfers
The pricing on the Inter-company Transfers does not count and is not taken into consideration. There is no need to zero out the pricing on these orders. A Deal Price for this Ship-to record can be set up which will automatically zero the price for new orders.
Full inventory costs are transferred on these orders.
The material on an Inter-Company Transfer can be expensed upon receipt at the Transfer Facility. This option is set on the Part's Properties tab of the Item Master . The value of the inventory is posted to the item’s Material Expense Account.
An item’s IC Xfer Markup % defines a percent of the item’s cost that will be applied during Inter-company Transfers. This percentage will be added to the Markup Type and factor on the Receiving Facility.
If Sales Labels or Certificates of Analysis will need to be printed when shipping the Inter-company Transfer, such as when transferring items to Consignment Facilities, then the COA and Sales Label need to be added to the Document Group that will be specified on the Inter-company Transfer Order.
The General tab on the Facility record contains a field, "Automatically Receive ICT". If checked, the system will check during shipping if the order is an ICT and the Facility that is being transferred to has this automatic ICT receive flag checked. If so, the system will automatically receive the order. This supports situations in which material needs to be put away in defined Locations when receiving. The logic checks for the Item Master's Facility to find a Location to set. If this does not have the Transfer Facility, the logic will check the default Location on the Item Master. If this fails, the fall back is the default Location for the default Location Type of that Facility. A prompt will be displayed to the user if the user checks the auto ICT flag but there is incorrect setup.
Lots in the "Pending QC" status may be selected when shipping Inter-company Transfer orders. Users will be able to perform QC testing while Lots are in transit and also when they have been received at the Receiving Facility.
The "Min. Transferable Qty" and "Incremental ICT Qty" fields on the Item Master Facility tab are used to determine Facility specific quantity limits for Inter-Company Transfers. These fields are used in situations where customers transfer and sell the same items from the same Facility in DEACOM. In this case, the Minimum Saleable and Incremental SO Quantity fields may be used by customers to determine quantity parameters when items are sold, thus allowing them to specify different quantity parameters for Inter-Company Transfers from the same facility. Security exists to allow users to enter quantities less than the minimum or different than the incremental quantities specified in these fields.
Sales order header User Fields are used when creating an order type of Inter-Company Transfer. If any of these User Fields are marked as required, users will be prompted with a list of the User Fields when creating Inter-Company Transfers via MRP. Users can then enter the appropriate values. Once complete, the system will continue with the creation of the Inter-Company Transfer.
If items are flagged to “Require Facility Entry”, the item must have Facility Part Cross References for both source and destination Facilities in order to be placed on the transfer order.
Only sales orders of type Inter-company Transfer can be shipped with Pending QC lots. Attempts to ship sales orders with Pending QC lots of a type other than Inter-company Transfer will be denied.
Auto-receipt functionality for Inter-Company Transfers is available to EDI. If a inter-company transfer receipt date is specified on the EDI import profile, the user can auto-receive the inter-company transfer. There is no difference from the manual ICT Receipt process.
The "Retain Lot Costs on IC Xfer" flag in Facilities, when checked, the received lot will be set at the current cost, with no markup added to the inventory value.