How to show the parameter for accounting for level 3 warehouses and checking transfers, reserves, and temporary storage

Inventory and Level 3 Warehouses: Parameter Settings, Causes of False Shortages, and Document Checks

During the operation of a retail business, goods are constantly moved between stores, reserved for customer orders, or transferred for delivery. Level 3 warehouses are used to account for such transitional states — service warehouses where goods are recorded temporarily. Why does the quantity of goods in the inventory statement not match the quantity in stock as of the current date, why do goods from seasonal storage boxes appear in the statement, why do shortages occur after stocktaking for goods that are actually available, and how should incomplete transfers be handled correctly? This article explains in detail how Level 3 warehouses interact with the inventory process and how to prevent false shortages.

What Are Level 3 Warehouses in the Inventory System

Level 3 warehouses are created automatically by the software for each main accounting center when the corresponding operating modes are used. These include: «Goods in Transit», «Reserve Warehouse», «Temporary Storage Warehouse», and warehouses for seasonal storage boxes. When goods are moved from the main warehouse to a Level 3 warehouse, they are deducted from the store’s main stock balance but remain on the company’s balance in transit or reserved status.

Parameter for Including Level 3 Warehouses

When creating a new inventory statement, the document settings include the «Include Quantity in Level 3 Warehouses» parameter. This option is enabled by default, and its state is saved individually for each user: if the parameter was disabled in the previous statement, it will also be disabled in the new one.

This parameter answers one of the most common user questions: why, when a product is added to an inventory, does the quantity shown not match the current balance in the main warehouse? If the parameter is enabled, the software totals the product quantity in the main accounting center and in all its subordinate Level 3 warehouses.

Business owners also ask why goods from temporary storage boxes appear in the inventory statement. This happens because all goods circulating in warehouses and not deactivated are subject to inventory in order to confirm their actual availability.

Causes of False Shortages

A false shortage is a situation in which goods physically exist or are in the process of being transferred, but after the inventory statement is closed, the software generates a write-off document. The main causes of this situation are related to incorrect handling of Level 3 warehouses:

1. Incomplete transfers («Goods in Transit») when the parameter is disabled. If goods were sent by internal transfer to the «Goods in Transit» warehouse but have not yet been accepted by the recipient, they are recorded in a Level 3 warehouse. If the «Include Quantity in Level 3 Warehouses» parameter is disabled during inventory, the software will expect a zero balance for these goods in the main warehouse. Since the goods are not physically scanned (they are in transit), the software writes them off, creating a false shortage.

2. Incorrect statement settings. If the statement was created with the Level 3 warehouse inclusion parameter enabled, but the goods being transferred were not physically scanned during the stocktake, the software will record a discrepancy and write them off. This parameter cannot be changed in an inventory statement that has already been created and filled in. If the option was enabled by mistake, a new inventory statement must be created without this setting.

3. Manual intervention and duplicate goods. Previously, situations occurred where users attempted to add the same product to the statement separately from the main warehouse and from the reserve warehouse, which resulted in the product being displayed only in the quantity from one of the warehouses. The software processes this data automatically when the Level 3 warehouse inclusion parameter is enabled, so manually adding the same item from different warehouse levels is blocked by the system to prevent errors.

4. Duplicate internal transfer invoices. Shortages and discrepancies may arise from incorrect user actions when internal transfers are created from an accounting center to the same accounting center. This disrupts the warehouse status because the document is simultaneously an incoming and outgoing document for the same location.

5. Stuck reserves. Goods may remain in the temporary storage warehouse (Level 3) if the customer order was fulfilled through another mode (for example, through a regular sale), while the original order was not closed.

Checking Documents Before Stocktaking

To avoid false shortages, documents must be checked and prepared before starting inventory:

• Check the internal transfer register. Open the corresponding register and check for postponed (inactive) internal transfers and invoices with the «Goods in Transit» status. All transfers must either be completed (accepted by the recipient) or canceled. Partial acceptance of an invoice from the «Goods in Transit» warehouse is not possible, so if discrepancies are found, the invoice must be accepted in full and adjustment documents must then be created.

• Analyze reserved goods. Check for goods in reserve warehouses and temporary storage warehouses. If there are orders that were actually fulfilled but not closed in the software, they must be closed or the reservation must be released.

• Remove incorrect transfers. Product movement must be checked for circular transfers (transfers to the same location) or duplicate transfers to the Goods in Transit warehouse. If such documents are found, they must be deleted before the stock count begins.

Keeping all warehouse documents up to date and correctly selecting the Level 3 warehouse inclusion parameter when creating the statement are essential conditions for conducting an accurate inventory without false discrepancies.