RSMUS.comIntercompany Transfer Orders are used to move items from one subsidiary location into another subsidiary location. With an Intercompany Transfer Order, you are able to track your items in transit that have been shipped out of the inventory from one subsidiary and received into another subsidiary’s inventory
What are incoterms and why do they matter?
International commercial terms (incoterms) are used to define the transfer of ownership. When entering an intercompany transfer order, incoterms determine the point at which ownership of items is transferred between locations. The following incoterm options are available within NetSuite:
- Ex Works (EXW) – Inventory ownership is transferred at the shipping point (i.e., at the time of fulfillment).
- Delivered at Place (DAP) – Inventory ownership is transferred at the destination (i.e., at the time of receipt).
It is important to be intentional with your selection of incoterms as it will impact the general ledger. The following sections will highlight examples of each incoterm and how they work within NetSuite.
Ex Work (EXW)
Item Fulfillment and associated GL impact:
Item Receipt and associated GL impact:
Delivered at Place (DAP)
Item Fulfillment and associated GL impact:
Item receipt and associated GL impact:
At time of fulfillment, inventory is out of the warehouse but still owned by the beginning location. With DAP, ownership is transferred to the destination location on receipt. With EXW incoterms selected, the intercompany clearing account is impact at time of fulfillment while DAP incoterms impact the intercompany clearing account upon receipt.
NetSuite’s Intercompany functionality offers many features to allow businesses to efficiently process transfer orders across multiple subsidiaries and correctly assign timing of ownership transfer with incoterms. Incoterms directly impact the general ledger and provide clarity into the transfer of ownership. NetSuite makes tracking of intercompany transfer orders clear and easy to manage.
Please contact our team to learn more or reach out if you have any questions!
Siena Gibbs
Siena Gibbs is a NetSuite consultant specializing in Global clients with a focus on procurement and intercompany best practices.