ANS-0258 · INVENTORY & ITEM MANAGEMENT
How to Manage Partial Receipts and Lost Units in NetSuite Transfer Orders?
NetSuite allows partial receipt of transfer orders; this guide details managing inventory in transit and accounting for lost units effectively.
Short answer
When using transfer orders in NetSuite, fulfilled items are posted to "Inventory in Transit". While partial receipts are allowed, all fulfilled quantities must be received to clear this account. For lost units, the recommended approach is to receive them first, then immediately adjust them out to maintain accurate accounting records.
Scenario
Organizations utilizing NetSuite's transfer order functionality, especially with "Use Item Cost as Transfer Cost" enabled, may encounter situations where only a portion of the transferred items are received. A common challenge arises when some units are lost during transit, leading to questions about how to properly account for these discrepancies and close the transfer order without causing accounting issues.
Solution
Fulfilled items post to the "Inventory in Transit" account. While NetSuite's current functionality allows for partial fulfillment and receipt of transfer orders, it is crucial to receive all fulfilled quantities to properly flush this account out. If a transfer order is closed with fulfilled quantities remaining unreceived, an accounting discrepancy will occur.
The recommended approach for handling lost units during transfer is a two-step process:
Receive the full quantity of items that were fulfilled, including any units that were lost in transit.
Immediately adjust out the lost units using an inventory adjustment to reflect the actual inventory count.
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