Transfer Order and Revenue Transaction

Epicor ERP 10
1

We are working through using the Transfer Order Process. We have set up several sites, and our goal is to move inventory from one site to another.

We use Average Costing. The “trick” is that we want the receiving site to use Standard Cost, and the inventory we transfer to the receiving site will be carried at zero value (this is customer used equipment we want to write off as used and quarantine away from our regular finished goods).

Everything works as we had hoped, EXCEPT the last entry Epicor makes when we receive the inventory at the receiving site is a credit to REVENUE and a debit to COGS for the value of the part. We have no clue why this is happening, figure I have missed something in the setup.

Below are my notes on the site setup process we used:

Site Creation Notes\Steps:

Go to Epicor \ System Setup \ Company\Site Maintenance \ Site Maintenance

Use NEW pull down and select NEW SITE

Fill in as much of the basic information as possible - time zone as example, for the most part leave everything as default (we will change Cost ID later)

Use NEW pull down and select NEW SITE GL CONTROL - Type = Division - Account = “where we want expenses to hit”

Go to Epicor \ System Setup \ Company\Site Maintenance \ Site Cost Maintenance

Use the NEW button create a new Cost ID —> be sure to link Primary SIte (but you will also need to do the next step!!!)

Go to Epicor \ System Setup \ Company\Site Maintenance \ Site Maintenance —> use the Action pulldown, Change Site Cost ID, set new ID we just created, DON’T forget to hit PROCESS (gears)

Go to Epicor \ System Setup \ Company\Site Maintenance \ Site Configuration \ —> Module tab \ Inventory Tab —> Serial # Tracking tab —> Set Serial Tracking Options to “Full Serial Tracking”

Go to Epicor \ System Setup \ Company\Site Maintenance \ Site Configuration \ —> Module tab \ Inventory Tab —> Serial # Tracking tab —> Set Lower Level Part Serial Tracking Options to “Full Serial Tracking”

Setup new warehouse under the Site - you will also need to setup at least one Bin in the new warehouse

PRIOR TO ANY TRANSACTIONS FOR EACH PART NUMBER

** Each Part we transfer into the new Site will need to be setup with the new Site, Warehouse and Bin

** For each part we intend to transfer, we will need to set the site cost to the appropriate method (note for UXAccess this is STD, and zero value to “expense” them on transfer)

Need to setup GL Control Code for EACH site to guide STOCK TRANSFERS or PLANT TRANSFERS. Intra-Site Transfers for both “parking spots” for the transfer. The goal is a JE for both sites that removes the part from inventory on the first side and adds to inventory on the other side.

2

Are you familiar with the inventory transaction hierarchy guide?

If so, can you post a screenshot of what step in there you think is not going right?

Also, do you use “interdivisional accounting” (that’s a setting)?

(If not, good. If you do, give up.)

3

Yep, I am familiar with the hierarchy.

It basically goes like this: we initially setup the transfer order shipping out the part from our main warehouse - transaction history shows a JE like this (I used $100 for the part as an example):
debit intracompany acct $100
credit inventory <$100>

Good so far.

But when we receive at the other site, we get a JE like this:
debit Cost Transfer Variance $100 (we are OK with this)
credit intercompany account <$100> (we are OK with this)

but then (and these all zero out):
debit IntraCo Transfer $100
credit IntraCo Transfer <$90> (materials)
credit IntraCo Transfer <$10> (labor)
credit Revenue <$100)
debit COGS-M $90
debit COGS-L $10

I have no idea why it books the final Revenue and COGS JE.

4

The Part Trans Created are STK-PLT (in the shipping site) and PLT-STK (in the receiving site)? Seems like only part trans of (*-CUS) should ever generate GL transactions to Revenue and COGS accts.

Are there GL controls setup on the part, part class, or Product Group?

Is the part Qty Bearing in the receiving site? Does the TO recpt affect QOH?

(this is just a drive-by posting. Those questions were more for you think about, than for me to think of the next steps)

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5

Great questions - and “yes” to each. These are parts that we have been using for years at our central site. We are now offering our customers “temporary use” of these parts in a rental type situation. I want them on the books, quantity bearing BUT with zero value AND not co-mingled with our normal stock.

6

Is the new site, just a virtual site, to be used just for this ability to separate the used items from the new ones?

Maybe too late, but wouldn’t just making a new part number for the used ones have worked?

7

You are correct - thinking of it in terms of a virtual site is appropriate. I simply want to quarantine the “rental type parts” away from our finished goods, carry them at zero book costs and track them through a new site.

Yes, a new part number would work, but it would also create that new part number on future documents (quotes, shipping docs, etc). For our customers, that makes this a problem, as the parts we sell are “configuration” approved for aircraft. Changing a part number is a big deal.

8

So I do know the Transfer Receipt is using the parts Product Group for coding the Revenue and COGS entry. They match. What I can’t understand is why the Transfer Receipt transaction books this JE - anyone know why? Why is an inventory transfer booking an offsetting Revenue/COGS entry?

9

I think my only solution is to do a reclass JE after we do the transfer to eliminate the parts of the JE that I don’t need.

10

That would be a customisation on the COSandWIP GL transaciton type for the STK-PLT and PLT-STK transaction types I am guessing…

I would be taking a close look at those transaction types in the heirachy to understand which gl controls and contexts are being used and confirming that they are not using your COGS accounts.

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11

And just another thought after looking at this again is if you are wanting to eliminate extra entries. Having the control contexts for debit and credit with the same GL account will end the posting rule for that transaction type and will stop the entry as well.

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12

So by “control contexts” I think you mean the Product Group for the Part? If you mean something else let me know!

So doing the deep dive on the Transaction Hierarchies - as we thought it’s the Product Group that is directing the PLT-STK transaction to code a credit to Revenue and a debit to COGS.

I am wondering if this is done intentionally so that companies cannot hide revenue recognition via intra-company site transfers. For us the entry it forces is an equal and offsetting Revenue and COGS net zero.

13

Each row in the GL control, the name is the context, like WIP Material, inventory/expense

And if you really want to get creative you can create your own contexts, and modify the GL transaction type do do other things… But just because you can, doesn’t mean you should. :slight_smile:

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14

The problem I am having comes down to this - why does Epicor default back to the Product Group GL Control Code for my transaction versus the Stock Transfer Definition GL Control Code.

I can’t figure out what I am missing in my Site setup. It seems clear, but the transaction simply ignores my Transfer Definition.

15

Well, then if you are sure the hierarchy is lying not telling the whole story, then you will need to learn how to decipher the PE Log Viewer.

The hierarchy guide does lie. I have examples. But the PE Log Viewer will always tell you what really happened.

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16

As a follow up to my original question, through a ton of testing and trying different things a did solve the issue I was having.
This little checkbox makes all the difference:
image

InterDivisional CHECKED YES forces a Revenue Recognition JE on the Receiving Sites books.

Leave it blank and the transaction is a simple “IntraDivision” Inventory transfer.

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17

Well… I did try to tell you…

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