Stock transfers between shop and godown: record in-transit right

Record a stock transfer in three steps, sent, in transit and received, so goods on the road never go missing from your books. With a shop-to-godown example.

To record a stock transfer between branches, enter it in three stages: sent at the dispatching location, in transit while the goods are on the road, and received at the destination, counted by the person who unloads them. Compare the received quantity with the sent quantity line by line, and look into any difference before you close the transfer. Stock in transit is a real state with its own balance. It is not a gap between two entries.

Why not just reduce one location and increase the other?

Plenty of shops record a transfer as one adjustment: minus 50 at the godown, plus 50 at the shop, entered together. It looks tidy, but it causes three problems.

First, the shop's stock goes up before the goods arrive. The counter staff see 50 units on screen, promise them to a customer, and then find the tempo is still loading.

Second, nobody counts on arrival. If 47 cartons reach the shop and the books already say 50, the missing three only turn up at the next stock-take. By then nobody remembers which trip it was.

Third, you cannot see what is on the road. On a busy day with several trips, part of your stock is sitting in vehicles. A single adjustment hides that. Three stages show it.

What are the three states of a transfer?

State	Where the stock sits in your books	Who records it	Can it be sold?
Sent	Removed from the sending location	Sender, at dispatch	No
In transit	A transit balance for that transfer number	Generated automatically from the dispatch	No
Received	Added to the receiving location	Receiver, after counting	Yes, at the destination

Your total stock stays the same throughout: sending location plus in transit plus receiving location. Only the location changes. Stock value doesn't drop just because a vehicle is on the road.

How do I record a shop-to-godown transfer, step by step?

The numbers below are illustrative.

Say you run a hardware shop in the main market with a godown on the edge of town. Your weekend sale is over, and you are sending slow-moving stock from the shop back to the godown to free up shelf space.

Step 1: Create the transfer at the shop (sent). Transfer number TR-0142, from Shop to Godown.

Item	Sent qty
PVC pipe 1 inch, 3 m	40
Wall putty 20 kg bag	25
Hinges 4 inch, pack of 10	60

The shop's stock drops by these quantities the moment the goods are loaded. Print or share the transfer slip with the driver.

Step 2: The goods are in transit. Until the godown confirms, TR-0142 shows 40 pipes, 25 bags and 60 hinge packs in transit. The godown can't issue them and the shop can't sell them, but they still count in your total.

Step 3: The godown counts and receives. The godown keeper unloads, counts each item against the slip, and enters what actually arrived.

Item	Sent	Received	Difference
PVC pipe 1 inch, 3 m	40	40	0
Wall putty 20 kg bag	25	23	−2
Hinges 4 inch, pack of 10	60	60	0

The godown's stock goes up by 40, 23 and 60. Two bags of putty stay open against TR-0142.

Step 4: The mismatch check. Before you close the transfer, find out where the two bags went. Ask, in this order:

Were they ever loaded? Recount what is left at the shop.
Are they still in the vehicle?
Did they arrive torn or wet, and get set aside instead of counted?
Was one bag counted twice at dispatch?

Say one bag turns up at the shop, never loaded, and one bag burst on the way. Return the first to shop stock with a note, write off the second as transit damage, and close TR-0142 with a zero open balance.

What should a mismatch check cover?

Run this checklist every time received does not equal sent:

Recount at the receiving end, by someone other than the first counter
Check the vehicle and the loading area at the sending end
Compare the transfer slip with what was physically picked
Check for a wrong item swapped in, for example a 3 inch hinge sent instead of a 4 inch
Record the cause: not loaded, damaged, lost, or a counting error
Close the difference with a dated note naming who approved it

Set a rule for how long a transfer may stay open, and review every open transfer at the end of each day or week. An old in-transit balance almost always means a receipt nobody entered or a loss nobody reported.

What are the common mistakes?

The sender marks it received. It saves a step but removes the only independent count. The receiver should always enter the receipt.

The receiver types in the sent quantity. If the godown keeper copies the slip instead of counting, the check is worthless. Some teams hide the sent quantity on the receiving screen so the count is blind.

Editing the sent quantity to make the numbers match. That erases the evidence. Leave sent as it was and record the difference separately.

Bundling several trips under one transfer. When three trips share one number, a shortage can't be traced to a vehicle or a day.

Forgetting in-transit stock when reordering. If the godown is short but a transfer is already on its way, count that transfer before you raise a purchase order. The same idea of stock position appears in our reorder point formula guide, and each location needs its own reorder point.

When does this not apply?

If the shop and godown share one building and goods move across the floor in minutes, a single-step transfer may be enough, as long as someone still counts. The three-stage method earns its keep once there is a vehicle, a distance or a second person involved.

Some topics are outside this guide. Moving stock between branches in different states can have GST and documentation consequences. How to treat that, and when an e-way bill is needed, depends on your registrations and the current rules, so take it to your CA and check the official GST portal. Our explainer on CGST, SGST and IGST covers the background but does not replace that advice.

Distributors running several godowns and route vehicles will find more on location-level stock in our wholesale distributor inventory guide.

Last reviewed: November 2026

FAQ

Does stock in transit still count as my stock? Yes. Goods moving between your own shop and godown still belong to you. They have left one location and not yet reached the other, so record them in an in-transit state. They count in your total stock and stock value, but neither location can sell or issue them until they are received.

Who should record the receipt, the sender or the receiver? The receiver, always. The person who unloads and counts the goods confirms what actually arrived. If the sender marks the transfer as received, you lose the one independent check in the process, and any short delivery or damage disappears into a stock-take difference months later.

What should I do when the received quantity is less than the sent quantity? Record what actually arrived and leave the difference visible as a shortage against that transfer. Do not change the sent quantity. Then check the packing list, the vehicle and the sending location's count. Once you know the cause, close the difference as damage, loss or a counting error, with a note.

Do I need a separate transfer document for every movement? Give every movement its own transfer number, even small ones and same-day trips. One number per trip lets you match what was sent to what was received line by line. For the tax paperwork a transfer may need, especially between states, ask your CA, because the rules depend on your registrations.