Efficient stock movement is crucial for maintaining smooth warehouse operations and ensuring supply chains run smoothly without delays. In any ERP system, there are various ways to achieve this – some designed for speed and flexibility, while others are designed for control and detailed tracking.
In Microsoft Dynamics 365 Finance & Operations (D365 F&O), two tools are commonly used for moving inventory between locations: the transfer journal in D365 and the transfer order. At first glance, they may seem interchangeable, but they are built for very different purposes. Applying the wrong method can lead to inefficiencies, excess paperwork, or gaps in traceability.
This blog will break down the differences between transfer orders and transfer journals in D365, explore where each method is most effective, and provide practical examples so that warehouse teams, planners, and consultants can choose the right approach for their specific needs. We’ll also outline the process steps and best practices for using transfer journals and transfer orders in D365 F&O to help you get the most from each option.
Transfer journal in Dynamics 365 Finance & Operations
What is a transfer journal?
A transfer journal is a straightforward yet flexible method for moving inventory between locations without involving shipment tracking, carrier coordination, or in-transit warehouses.
It is most often used:
Within the same warehouse – for internal stock adjustments
Between nearby warehouses – where distance is minimal and formal shipping steps are unnecessary
For inventory dimension changes – such as location, batch, serial number, size, or configuration
This makes transfer journals an excellent choice when speed, simplicity, and low administrative overhead are the priority.
Practical scenarios
1. Urgent internal replenishment
The production department is running low on Packaging Material A, which is stored in bulk within the same warehouse. Using a transfer journal, the warehouse team updates the stock location immediately.
Benefit: Ensures uninterrupted operations by providing materials without delays due to logistics or approvals.
2. Inventory adjustment within the same warehouse
A cycle count reveals 10 units of Item B in the wrong location. The transfer journal updates the system instantly to reflect the correct placement.
Benefit: Maintains inventory accuracy without initiating shipment processes or approval workflows.
3. Store-to-kiosk emergency transfer
A retail store transfers 50 units of Product X to a nearby kiosk within the same mall. Staff carry the items manually, eliminating the need for a transfer order.
Benefit: Saves processing time by skipping unnecessary shipping and tracking steps.
Process flow: Creating a transfer journal in Dynamics 365 Finance & Operations
The transfer journal process in Dynamics 365 Finance & Operations is straightforward but must be followed carefully to ensure accurate inventory updates. Below is the step-by-step approach.
Step 1: Create a transfer journal
Navigate to Inventory management > Journal entries > Items > Transfer
Click on New to create a new journal. Enter the necessary details such as the Name (select a journal name from the list), Description, Site (optional), and Warehouse (optional).
Step 2: Add journal lines
Click on Lines to open the journal lines form. For each transfer line, provide:
Item Number – The product being transferred
Quantity – The number of units to move
From Site / Warehouse / Location – The source location for the transfer
To Site / Warehouse / Location – The destination location
Batch / Serial / Product Dimensions – Include changes if applicable (e.g., moving items to a new batch or updating configuration, size, or color)
Step 3: Validate the journal
Click Validate to run a system check for errors such as:
Insufficient stock at the source location
Invalid product dimensions
Conflicting inventory reservations
If issues appear, correct them before revalidating to ensure the journal can be posted successfully.
Step 4: Post the journal
Once the journal has passed validation, click ‘Post’. The system will:
Deduct the quantity from the source location
Add the same quantity to the destination location
Update any associated inventory dimensions immediately
Unlike a transfer order, there is no “in-transit” status — the update is instantaneous.
Step 5: Review posted transactions
To confirm the transfer, navigate to: Inventory management > Inquiries and reports > Journals > Item transactions Select the journal you posted and view its Transactions tab to see:
Date and time of the transfer
Quantities moved
Updated inventory dimensions
Source and destination warehouse details
Common uses of a transfer journal in D365 Finance and Operations
Internal location transfers – Move stock within the same warehouse (e.g., bulk storage to picking location).
Near-site warehouse movement – Transfer goods between close warehouses without the full transfer order process in D365.
Quick stock adjustments – Fast, manual updates without shipping or receiving steps.
Bypass shipping/receiving – Reduces warehouse workload by skipping the pick, pack, and receive steps.
Physical inventory corrections – Adjust stock after cycle counts or audits for real-time accuracy.
Inventory status changes – Change status (e.g., Blocked to Available) during transfer.
No Reservation or Shipment Needed – Unlike a transfer order in D365, no reservations or shipment records are required.
Manual, low-tracking moves – Ideal for store replenishment, seasonal displays, or visual merchandising.
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Transfer 0rder in Dynamics 365 Finance & Operations
What is a transfer order?
A transfer order in D365 Finance and Operations is a structured, multi-step process for moving inventory between physically distant warehouses, different sites, or legal entities.
Unlike a transfer journal, a transfer order includes:
Shipment and receipt steps for end-to-end traceability
In-transit tracking to monitor goods between locations
Integration with logistics and compliance workflows
This method is essential when the transfer involves significant travel time, carrier coordination, or separate handling by different teams at the origin and destination.
Practical scenarios
Scenario 1 – Inter-regional stock movement
A central distribution center in Lahore transfers 1,000 units of Product A to the Karachi warehouse for a sales campaign.
Benefit: Maintains full control over logistics and delivery timelines.
Scenario 2 – Movement between legal entities
Raw materials are sent from a manufacturing site to a packaging facility, which operates under a separate legal entity.
Benefit: Ensures traceability and accurate financial postings for intercompany transactions.
Scenario 3 – Cold storage transfer
Frozen goods are moved from Warehouse A to Warehouse B with strict temperature and time controls.
Benefit: Protects product quality and ensures compliance with cold chain regulations.
Scenario 4 – Return to the central warehouse
A store sends defective items back for inspection and reprocessing.
Benefit: Creates a documented, traceable return process.
Scenario 5 – Bulk transfers after demand planning
Excess stock is shifted from southern warehouses to northern ones based on forecast data.
Benefit: Balances inventory across the network with visibility over large-scale movements.
Key Differences: Transfer journal vs. transfer order
Feature
Transfer Journal
Transfer Order
Document Type
Inventory Journal
Inventory Order
Purpose
Simple and quick transfers
Controlled and trackable transfers
Tracking
No shipment/receipt tracking
Tracks shipment and receipt
Transit
No transit location
Includes transit warehouse
Workflow
Manual posting
Multi-step process with picking, shipping, and receiving
Inventory Impact
Immediate update
Phased (deduct on ship, add on receive)
Use Case
Quick adjustments or warehouse moves
Planned stock transfers across sites
Location Transfer
Can move items between different locations within the same warehouse
Can move items between warehouses or between sites
Batch Number Support
Allows changing item batch and serial numbers for traceable items
Supports batch and serial tracking throughout shipping/receiving
Product Dimensions
Supports site, warehouse, location, batch, serial, configuration, size, colour, and style transfer for a product.
Fully supports product dimensions across the process.
When to use transfer journal vs. transfer order in Dynamics 365 F&O?
Choose a transfer journal if:
Moving stock within the same building or between nearby warehouses (e.g., main storage to retail floor).
Making urgent inventory adjustments without shipping steps or transit tracking.
Performing quick, ad-hoc transfers after cycle counts or for seasonal display changes.
Example: A supermarket moves 100 soda cans from the backroom to checkout coolers using a transfer journal in D365, updating inventory instantly without creating a shipment.
Choose a transfer order if:
Shipping between different legal entities or distant warehouse locations.
Requiring carrier coordination, freight charge management, or proof of delivery.
Needing full traceability, in-transit visibility, and compliance-ready documentation.
Example: An electronics brand ships 500 headphones from a US warehouse to a Canadian distribution center using the transfer order process in D365, ensuring shipment tracking and customs compliance.
Benefits at a glance: Transfer journal vs. transfer order in D365 F&O
1. Transfer journal in D365 Finance and Operations
Fast execution – Posts instantly, making it ideal for same-site or near-site transfers where speed is critical.
Low learning curve – Requires minimal training, enabling warehouse teams to adapt quickly and reduce operational downtime.
2. Transfer order in D365 Finance and Operations
End-to-end visibility – Tracks inventory from dispatch to receipt, reducing the risk of loss, theft, or misplacement during transit.
Process automation – Automates documentation such as bills of lading and integrates seamlessly with TMS or WMS for efficient logistics coordination.
Actionable insights – Captures detailed metrics on transfer costs, lead times, and transit performance, supporting optimizing warehouse transfers using transfer orders in D365 F&O.
Best practices for transfer journal and transfer order usage in D365 F&O
Leverage automation – Configure transfer order templates for recurring or high-volume transfers to reduce manual work and ensure consistent processes.
Maintain a strong audit trail – Always use transfer orders for regulated or high-value goods, such as pharmaceuticals or perishable food, to ensure compliance and traceability.
Choose the right process for the right scenario – Apply transfer journals for quick, low-complexity moves and transfer orders for complex, long-distance, or compliance-driven transfers.
Integrate with related systems – Link D365 F&O with WMS, TMS, and reporting tools to improve accuracy, transparency, and operational efficiency.
Conclusion
In D365 Finance and Operations, transfer orders are best for long-distance or intercompany movements, offering full traceability, in-transit visibility, and detailed documentation. Transfer journals are suited for same-site or near-site transfers, posting instantly without the need for transit tracking, making them ideal for urgent replenishments, quick adjustments, and inventory dimension changes.
Using each method in the right context streamlines warehouse operations, improves inventory accuracy, and ensures compliance where required. For expert help in optimizing warehouse transfers in D365 F&O, contact us at marketing@confiz.com.
