Internal Transfers Explained

Internal transfers are a process whereby you upload transfer sheets into MarginEdge like any other invoice and we are able to subtract the value of the transfer from your COGS in one unit and add them to another location. These can be between different locations, and restaurants do not NEED to share a company concept though it is highly recommended.

 

What do I need to get started?

Contact help@marginedge.com to get started.

We’ll create a single vendor in your accounting system that is shared by each of your restaurants. This vendor will be named “{{Your Company Name}} - Internal Transfers”. Next, you’ll need to set up payment account(s) to accommodate this transaction. These payment accounts should be set to “Account Type Other” which specifies that instead of an invoice or bill being set to the accounting system, a journal entry will be.

 

Different restaurants set this up differently. Some restaurants have a single “to/from” for all their transfers, other users create a separate one for each of their restaurants, the choice is yours. This payment account in MarginEdge should be mapped to a balance sheet account in your accounting system which will accommodate these transfers. This balance sheet account is typically an “other current liabilities” type account, we cannot export internal transfers to an Accounts Payable or Accounts Receivable account. These payment accounts need to be created AND mapped before we can begin processing transfers.

 

Since there is no standard transfer, and there tends to be a learning curve when transfers first start to be uploaded, we recommend that you start sending internal transfers direct to help@marginedge.com at first so we can review your transfer sheets and give you feedback on best practices. Once they look good, we’ll let you know to start sending uploading them like any other invoice.

 

What should a transfer sheet look like?

An internal transfer sheet needs to have a few key pieces of information.

To and From Location: which Restaurant unit the transfers are coming from and going to.

Date: If this is not included, the transfers can still be processed, but the upload date will be used.

Invoice Number: Again, optional, but HIGHLY recommended, this makes it much easier to reconcile transfers

Line Item Data: Product name, preferably matching its name in MarginEdge, Count by Unit/Packaging, Unit Price, quantity, extended price. All of these fields are required.

Transfer total: Optional, but without this, we are less able to control processing quality.

See the example below:

 

transfers1.png

We recommend that the easiest way to produce a transfer sheet is to export your restaurant product list and use it as a starting place. This will automatically give you the product name, packaging, and the most current price!

I have my transfer sheet, what’s next?

The internal transfer sheets are uploaded to the MarginEdge restaurant unit of one of the two units involved, typically this is sending location.

Our team will process this transfer sheet at both the sending and receiving locations using the internal transfer vendor and payment accounts designated for transfers.

How will this look in MarginEdge reporting?

If the product names match those that are in MarginEdge we will associate the vendor item created by the transfer with the existing product in MarginEdge. At the sending location, this will subtract the value of the transfer from the purchased amount of that product, and correspondingly the value of that transfer from your COGS reporting This will look the same as if your vendor gave you a credit for the product, except the “vendor” in this case, is another one of your restaurants. Likewise, and the receiving location, the transfer will be added to the purchased quantity of that product and corresponding COGS category as if it was purchased from any other vendor.

How will this look in my accounting system?

At the sending location, a Journal Entry will be exported to your accounting system, crediting the appropriate COGS categories and debiting the other balance sheet account designated for these transfers. At the sending location, an equal but opposite journal entry, crediting the balance sheet account and debiting the cost of goods. The net result will be that the expense moves from the sending location to the receiving location, but and the balance sheet account that accommodates the other sides of the transaction has a net balance of 0.

Using the example transfer sheet above, this is how the journal entry would come over

 

transfers2.png

 

Frequent Asked Questions

*See a full list of invoice allocation scenarios here to explore this further.

What if I have an upcharge for the products I transfer? We are unable to accommodate this with the internal transfers process. Because the value being exported is being credited to COGS rather than revenue, so too would the upcharge, this would mean that the value being credited from COGS would exceed the cost paid, and can lead to a negative Cost of Goods sold. If you charge for your transfers, they will need to be rung into the POS like any other sale.

 

Can I just transfer category totals?

Yes, you can. Just keep in mind, that if we don’t know what products are going out the door or coming in the door, there’s no way for us to accurately report food usage on a product level.

 

How can I create a report showing me my transfers?

Check out this article on the topic.

 

What if I want to transfer recipes?

You would want to use our commissary feature.

 

What if I want to transfer within a single restaurant?

This is currently not possible in the software.

 

I want to export these transfers as invoices to be received and bills to be paid?

We cannot export an invoice to accounts receivable so this is not possible, the only way to transfer products is as Journal entries as described above.

 

What is the difference between internal transfers and commissary transfers?

The Commissary Feature in MarginEdge is an in-app tool that allows you to convert recipes into products and transfer them from a designated central location to other restaurant units in your company concept. Internal transfers are a process whereby you upload transfer sheets into MarginEdge like any other invoice and we are able to subtract the value of the transfer from your COGS in one unit and add them to another location. These can be between different locations, and restaurants do not NEED to share a company concept though it is highly recommended.

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