Inventory transfers between sites: how to move stock and keep both records right

A school group's central store sends $1,690 of supplies to one campus, and two cases of copier paper never leave the loading bay while a case of paper towels arrives crushed. If the transfer counts as done when the van leaves, the campus is charged the full $1,690. Its records now show $80 of stock it doesn't have, and nobody can say where the gap came from.

Record the same transfer at both ends and the campus is charged $1,610. The $80 is named, line by line, the next morning.

What is an inventory transfer between sites?

An inventory transfer between sites moves stock from one of your locations to another. The sending site's stock goes down, the receiving site's goes up, and no supplier or invoice is involved.

It goes by many names. Store chains call it a stock transfer between branches or an inter-branch stock transfer. Clinic networks send stock out from a central pharmacy. School groups send it from a central store to each campus. Restaurant groups send it from a commissary, which has its own costing questions. The document behind it is usually called a transfer order or transfer note.

Most transfers top up a site from a central store or even out stock between sites. Some rescue stock that would expire where it sits, which our guide to expiring stock transfers covers. This guide covers the process every inter-site transfer shares. For the wider view of stock across a network, see multi-location inventory management.

Why do transfers between sites go wrong?

Most transfer errors come from records kept at one end only. The sender logs what left, or the receiver logs what arrived, and nobody compares the two.

When a transfer counts as complete on dispatch, anything that was never loaded or arrived damaged becomes part of the receiving site's stock on paper. Nobody sees the gap until a stock take, and by then nobody remembers which van run caused it.

Record errors are common. A study of nearly 370,000 inventory records across 37 stores of one retailer found 65% of them were inaccurate. The authors list the distribution structure among the factors that make inaccuracy worse. Transfers are part of that structure.

What goes on a transfer order?

A transfer order needs enough detail for three people to do their part: the approver, the person who picks it and the person who receives it.

The receiver's half works like a goods received note for a supplier delivery. Each line is counted, and anything not accepted gets a reason.

Free tool

Expiry Risk & Inter-Site Transfer Planner

Deciding what to move comes first. Upload each site's stock with expiry dates, daily usage and cost, and the planner suggests transfers to sites that can use the stock in time, with ship-by dates.

Runs in your browser. No sign-up.

Open the transfer planner

How do you transfer stock between sites, step by step?

A sound transfer has six steps: request, approve, dispatch, transit, receive and settle. Each step has an owner, and each one leaves a record.

1. Request. The receiving site asks for stock, or a planner proposes the move. The request names the items, quantities, required date, budget code and reason. If a site can see spare stock at another location, a transfer request should come before a new purchase order.
2. Approve. Someone checks the request against the sender's stock and the receiver's budget. For high values, an approval matrix with the same limits as purchases works for transfers too. Flag any transfer that would leave the sender below its own reorder point.
3. Pick and dispatch. The sender picks each line, records the quantity loaded and signs it out. The sending site's stock falls now, and the goods move to in transit.
4. Transit. The goods are on a van or with a courier. They still belong to the organisation, but they are on neither site's shelf.
5. Receive. The receiving site counts each line and records received, rejected and accepted quantities, as it would when receiving a supplier delivery. Only the accepted quantity joins its balance. Neither end should be able to edit the other's half.
6. Settle. Any gap between dispatched and accepted becomes a named discrepancy. Someone looks into it within an agreed time, such as two working days. It closes as found and sent on, returned to the sender's stock, or written off to the account your policy names.

Every step should leave an entry with the person, the time and the quantity. Corrections go in as new entries, never as overwrites. An append-only audit trail keeps the sequence that explains any later variance.

What is inventory in transit?

Inventory in transit is stock that one site has dispatched and another has not yet received. It has a real value, and it sits between the two sites' records.

Treat it as a location of its own, whose balance equals the transfers dispatched and not yet received. You know how long a run should take. Anything in transit for longer needs a phone call.

A growing in-transit balance often means a busy site is unpacking boxes and never confirming the transfer. Transfers confirmed at both ends keep that balance honest.

A worked example: a short transfer from a central store to a campus

A school group's central store sends four lines to Riverside Campus on a Monday van run. On Tuesday the campus receives it. Two cases of copier paper are missing, and one case of paper towels arrives crushed and wet.

Three checks hold for every transfer:

Dispatched = accepted + short + rejected, on every line

Charge to the receiving site = accepted quantity × unit cost

In transit = dispatched value − accepted value − value logged as a discrepancy, which must reach zero once the receipt is recorded

The central store dispatched $1,690.00 and Riverside accepted $1,610.00. The $80.00 gap is $49.00 short and $31.00 damaged.

The entries at both sites

The central store finds the two cases of paper on its loading bay and puts them back in stock. The crushed towels can't be used and are written off.

The central store's stock falls by $1,641.00. Riverside gains $1,610.00, and its budget is charged $1,610.00. The $31.00 difference is a write-off with a reason attached. Every column closes. If Riverside still needs the paper, it goes on the next run as a new transfer.

One step or two?

The goods and the van are the same in both columns. The only difference is whether the receiving site confirms what arrived.

Which site's budget carries a transfer?

The receiving site normally pays for what it accepted, at the cost the stock already carries. The sender carries what it sent and the receiver never got, unless your policy names a central account for transit losses.

Three rules settle most arguments:

• Transfer at cost. Moving stock between your own sites isn't a sale. The stock keeps the unit cost it had at the sender, with no markup.
• Charge on acceptance. The receiving site pays for the accepted quantity only. A campus should never pay for paper it never got.
• Name the account for losses. Decide up front whether transit losses go to the sender, the transport budget or a central shrinkage account. Whoever settles a discrepancy then applies a rule instead of negotiating one.

Freight is the other decision. Under IAS 2, the cost of inventory includes the costs of bringing it to its present location and condition. Whether your own van runs belong in stock cost is a question for your accountant. For budgets, suppose the Riverside run costs $60 in driver time and fuel:

Absorbing freight centrally is simplest, and sites don't hold back requests to avoid a charge. Recharging shows sites the cost of many small transfers, which nudges them towards larger, regular runs. An uplift should roughly match what the vans cost over a year, so review the rate yearly.

How do you handle a short or damaged transfer?

Record it at the door, find the cause within days, and close it under a rule you agreed in advance.

• Record the reason on the line. Short, damaged or wrong item, with a photo for damage.
• Check the sender the same day. Recount the pick location and check the van.
• Give it an owner and a deadline. An open discrepancy is still stock nobody can find.
• Look for patterns. Repeated shortages on one route or item point to a process problem, and feed your inventory variance reporting.

When this doesn't apply

• Separate legal entities. A transfer between companies in a group may be an intercompany sale, with invoices, tax and transfer pricing rules. Take advice.
• Issuing stock for use. Supplies handed to a department to use up are consumption. There is no receiving balance to update.
• Production. A central kitchen turns ingredients into prepared food, so the cost that moves follows a recipe.
• Regulated items. Controlled drugs and hazardous chemicals may need extra signatures and records. Check the rules that apply to you.

Sources

• DeHoratius, N. and Raman, A. (2008). Inventory record inaccuracy: an empirical analysis. Management Science, 54(4), 627–641.
• IFRS Foundation. IAS 2 Inventories.