Stock transfers between warehouses, shops and branches

What is a stock transfer between warehouses?

A stock transfer is a document that takes a quantity of a product out of one of your own locations and puts the same quantity into another. Nothing is bought or sold. The goods simply change address, and the record follows them.

A warehouse here means any place you keep stock and want to count separately: a warehouse, a shop floor, a factory store, a branch, a van or a project site. Each one carries its own quantity of every product, and a transfer is the only clean way to move quantity between them.

• Two sides, one document: the source warehouse goes down and the destination goes up by the same quantity, on the same date.
• Same cost on both sides: units leave and arrive at the product's current average cost, so no profit or loss appears.
• Total unchanged: the business owns exactly what it owned before, so total quantity and total stock value stay where they were.

When should you use a transfer and when an adjustment?

Use a transfer when stock moves between two of your locations and use an adjustment when the total stock the business owns actually changes. The test is simple: after the movement, does the business own more, less or the same?

The common mistake is to fix a location mismatch with two adjustments: minus 200 at the warehouse and plus 200 at the shop. The quantities end up right, but the record now says stock was lost and found, and the reasons on both lines are false. A count that finds a shortfall at one location and an excess at another usually means a transfer was never entered. Record the transfer, then recount. The stock audit guide covers the count itself.

What does a transfer cost, and does it make a profit?

A transfer within one business makes no profit, because the units move at the product's current weighted average cost on both sides. The shop does not buy from the warehouse; the business moves its own goods.

When the average is kept per product across the whole business, a transfer cannot change it: the out side and the in side carry the same cost, so the average before and after is identical. The weighted average cost guide shows how receipts move the average and why issues and transfers do not.

How does a warehouse to shop transfer look in numbers?

Harbour Steel Furniture, the fictional business on this site, keeps bulk stock in its Main warehouse and sells from its Eastside store, with amounts in US dollars. On Monday the store is down to 50 steel folding chairs before a school order from Westbrook School, so the store manager asks for 200 more. The average cost of the chair is $125.

Each row is quantity × $125. The warehouse loses $25,000 of stock value, the store gains exactly $25,000, and the inventory account in the books does not move, because both locations sit in the same inventory account. No journal is needed for the business as a whole.

Is a transfer between branches a taxable sale?

In most VAT and GST systems, moving goods between two locations of one business under one tax registration is not a sale, so it carries no tax and needs no invoice. A transfer to a separately registered entity, or across a border, can be a taxable supply or an export, with its own paperwork.

The value to put on such an invoice, and whether the receiving side can reclaim the tax, are questions with their own rules. Settle them with your accountant before the first shipment, not after the first letter from the tax office. In India, a transfer to a branch under a different GSTIN is generally a supply between distinct persons and needs a tax invoice; the multi-branch accounting guide covers branches in more detail.

What about goods that are still on the road?

For most small firms, the practical rule is to post the transfer on the day the goods leave and check the quantity when they arrive. Between those two moments the stock shows at the destination, even though it is on a lorry.

With same-day or next-day deliveries the gap is hours, and the receiving end can count against the printed transfer note. Where the journey takes days, some owners add a warehouse called "In transit" and post two transfers, one on dispatch and one on receipt.

1. 1

   Draft the transfer

   Pick the source and destination warehouses, the date and the lines. Check each line against the quantity available at the source.

2. 2

   Post it on dispatch

   The person with approval rights posts the transfer when the goods are loaded. Print the transfer note and send it with the vehicle.

3. 3

   Count on receipt

   The receiving end counts against the note and signs it. If 198 arrive instead of 200, record the 2 as an adjustment at the destination with a reason.

4. 4

   Cancel, do not edit

   If the goods never left, cancel the posted transfer. The cancellation reverses both sides and keeps the history.

Should a contractor keep a warehouse for each site?

A contractor who sends material to several sites gets a far clearer picture with one warehouse per active site. The site warehouse then shows what was sent, and whatever is left at the end is either transferred back or consumed.

• Send by transfer: cement, pipes or panels go from the main store to "Site: Elm Road villa" by transfer, at average cost.
• Return by transfer: unused stock comes back the same way, so the site's figure falls and the store's rises.
• Consume by adjustment: material used up on the site leaves through an adjustment with a reason, which moves its cost out of stock.
• Close the site: when the job ends, the site warehouse should show zero; anything left is either returned or explained.

See how this fits construction and contractors.

How do you keep a stock register per warehouse?

A stock register per warehouse is just the list of movements filtered to one location: opening quantity, every receipt, issue and transfer in date order, and the running balance. If every movement comes from a posted document, the register needs no separate upkeep.

• Every place that holds stock overnight has its own warehouse, including sites and vans
• Goods change location only through a posted transfer, never through two adjustments
• The transfer is posted on dispatch and the receiving end counts against the note
• Shortages found on receipt are recorded as adjustments with a reason at the destination
• Each warehouse is counted at least once a quarter, the busy ones monthly
• The total stock value matches the inventory account at month end
• Transfers to a separately registered entity are agreed with the accountant and carry a tax invoice

When a warehouse register goes below zero, the usual cause is a transfer posted late or not at all. The negative stock guide walks through the fix.

How does SimpleERP handle stock transfers?

SimpleERP records a transfer as its own document between any two warehouses, and posting it writes both movements at the product's weighted average cost. Quantities are kept per warehouse and the average is kept per product across the business, so total stock value does not change.

• Stock changes only through posted documents: bills, invoices, notes, adjustments, transfers and work orders.
• Posted transfers cannot be edited. Cancelling one reverses both sides and keeps the full audit history.
• Adjustments use count mode: enter what you counted and a reason, and the difference posts.
• The stock screen shows total stock value beside the Inventory account balance and the difference between them.

Read more on the inventory management page, or start with the inventory management guide for the whole picture.