Enter the sales orders at zero price…then you’d just be moving inventory costs around.
SO and corresponding PO pricing need to match, otherwise you’d need offsetting GL entries as well. The hole keeps getting deeper.
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Bah. You’re right. And if you did SO and PO at zero price it’d screw up the books if parts were average costing (standard might work).
Yup, the hole’s deeper than I thought
No, I wanted to work through the idea first. But I’d never do this without them of course.
Even if they were separate Epicor companies? This is a tangent question - not based on the original question of a single company.
My ulterior motive in asking about this is to justify what we have now which sounds like the right way but is often criticized here as being stupid. (FYI the right way was my idea…)
If they are separate COMPANIES in Epicor, they should have separate Tax IDs with separate, INDEPENDENT financials. When they are separate companies it IS as if you are dealing with Amazon. When you are only separate SITES that is not the case.
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If it makes you feel any better I found out last week that some people on our team thought transferring inventory was too difficult so they did inventory adjustments in each site. It’s too bad that they transposed numbers and the inventory added in one transaction didn’t equal the inventory removed in the other.
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Well good, than that further justifies my (fairly unilateral) decision 4 years ago.
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I grant everything you list. But most of all, the people who perform the TO transactions in Epicor aren’t usually given the time or the training to do it properly. It IS an extremely “fragile” process (it breaks pretty easily), and the folks in the warehouse just want to get stuff in or out of the truck. They don’t have time or energy to fix the problems. This is NOT a knock on them… the tool we’ve given them to use isn’t really up to the task.
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one more piece… to the warehouse folks, “properly” means “the screen closes without any STOP errors” while to the rest of us it means “all i’s dotted and t’s crossed”. Same word, different meanings.
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We had to go the SO/PO route as a single company with multi-sites. Some of the same reasons I saw mentioned here - can’t ship a transfer order from a job and can’t use configured product. That and the MRP version we were on was so buggy it never got past deleting existing transfer order suggestions on a full regen (its fixed now).
We had a customer and a supplier set up for both plants and used an intercompany GL on all 4 for eliminations. It is extra work for purchasing to create the PO and order entry to enter it. It is much easier for manufacturing and shipping though.
To help with the financials the PO was set for the part cost. For standard costed parts, you can even associate a supplier price list. In our case standards were rolled 1x/year so it just because part of the process. Our configured parts were average, so transacted at actual. It did cause some manufacturing variances. Your accounting team would have to test.
Jenn
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Hi Jason,
Yep, I feel your frustration. Transfer orders are the somewhat ignored red headed stepchild of Epicor. So there’s the complaints here, which are many, but I will speak of the benefits:
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we used to transfer parts just by calling the plant up and asking them to send them. Quantity adjustments were made sometimes on either side. People remembered or forgot to ship. Requests, Shipments, and Receipts are now all in system. Long lead transfers are recollected for what they heck they are for in sending plant.
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required parts at other plant that occasionally uses them but are purchased/stocked in another are suggested and firmed
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plants manufacturing parts for eachother’s use is suggested all the way through job suggestion, purchasing suggestions, etc
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accounting is fairly happy (@althomas ?) with the accounting AS LONG as nobody tries to transfer directly to job in another plant. I think there might be an adjustment needed if we ship the transfer and receive it in next plant and then add labor or material later to sending job. But that’s not good transactional discipline regardless of transferring parts…
I think we must have some Frideas RE transfer orders in there. I think I might’ve voted on some here or there in the past. Honestly, Epicor has them working 90% of the way. If they put effort in to take it to the finish line and fix the bugs for good and make the accounting easier it would be a great thing.
Nancy
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Everyone had good advice here; I picked this as “the solution” just to pick something.
In a nutshell,
- It can be done
- It’s not good practice at all (see solution post)
- It usually creates far more work and far more problems than it saves
- But occasionally, rarely, it can be a reasonable option (especially if your hands are tied)
Thanks everyone.
@Nancy_Hoyt About time you responded! I saw you started a reply yesterday. You are one of the multi-site leaders here.
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If memory serves, this was a weak spot for Intercompany. We’d ship to Germany and poof! The cost of the material disappeared. And Poof! It reappears when the product is received. There is no systemic way in Kinetic to transfer ownership, i.e. recognize revenue properly according to INCOTERMS. For years, er decades, U.S. ERP companies called this the FOB field, which is only one INCOTERM of many. The first Epicor Idea for this (143) is marked as delivered but the field was only added to some tables. There is no logic behind it yet. Andy Cheuk entered a new Epicor Idea to finish the work.
Properly implement INCOTERMs (Cont’d) - 4193
For those who need it, show it some love.
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My boss has setup the GL Controls when we migrated to Epicor. There are GL Controls setup up for Plant Transfers that automatically account for the movement to different GL accounts. Don’t quote me on this but this is a rough estimate of the process:
At the end of the month, a reversing Journal entry is made to the net balance of Intransit GL account, so we could show whatever is in-transit as part of our inventory in the balance sheet as of month end. Reversing Journal entries reverse themselves at the beginning of the next period.
| Plant 1: Transfer material via transfer order ( STK-PLT) | |||
|---|---|---|---|
| Debit: Intransit GL Account | $100.00 | ||
| Credit : Raw Materials Inventory Account Plant 1 | $100.00 | (Inventory is deducted from plant 1 stock) | |
| Plant 2: Received the transfer material (PLT-STK) | |||
| Debit : Raw Materials Inventory Account for Plant 2 | $100.00 | (Inventory is added to plant 2) | |
| Credit : Intransit GL Account | $100.00 | (Reverse the intial debit, now net balance = $0) | |
| Numerous such transactions occur between plants over the month | |||
| What is the net balance of this Intransit GL account at month end? This should tell you what’s still in transfer(transit) during month end. | |||
| Even though this is still in transit, it’s still part of our inventory and want to show in the balance sheet. A reversing manual journal entry is made: | |||
| Debit: Inventory Account - Intransit | $25.00 | Will ben shown in the balance sheet for the current period. Will reverse beginning of next period | |
| Credit: Intransit GL Account | $25.00 | Temporarily zero out the Intransit Account for month end. Will reverse beginning of next period | |
| Sample Balance Sheet Inventory Section: | |||
| Raw Materials | $100,000.00 | ||
| WIP | $45,000.00 | ||
| Finished Goods | $25,000.00 | ||
| Inventory - Intransit | $25.00 | ||
| Net Total Inventory : | $170,025.00 |
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