diff --git a/modules/apps/transfer/keeper/forwarding.go b/modules/apps/transfer/keeper/forwarding.go
index 52e31e6d606..dab78bb32a5 100644
--- a/modules/apps/transfer/keeper/forwarding.go
+++ b/modules/apps/transfer/keeper/forwarding.go
@@ -11,6 +11,7 @@ import (
 	"github.com/cosmos/ibc-go/v8/modules/apps/transfer/types"
 	channeltypes "github.com/cosmos/ibc-go/v8/modules/core/04-channel/types"
 	host "github.com/cosmos/ibc-go/v8/modules/core/24-host"
+	ibcerrors "github.com/cosmos/ibc-go/v8/modules/core/errors"
 )
 
 // ackForwardPacketError reverts the receive packet logic that occurs in the middle chain and writes the async ack for the prevPacket
@@ -38,8 +39,6 @@ func (k Keeper) ackForwardPacketTimeout(ctx sdk.Context, prevPacket channeltypes
 		return err
 	}
 
-	// the timeout is converted into an error acknowledgement in order to propagate the failed packet forwarding
-	// back to the original sender
 	forwardAck := channeltypes.NewErrorAcknowledgement(errors.New("forwarded packet timed out"))
 	return k.acknowledgeForwardedPacket(ctx, prevPacket, forwardAck)
 }
@@ -97,3 +96,57 @@ func (k Keeper) revertForwardedPacket(ctx sdk.Context, prevPacket channeltypes.P
 	}
 	return nil
 }
+
+// forwardPacket forwards a fungible FungibleTokenPacketDataV2 to the next hop in the forwarding path.
+func (k Keeper) forwardPacket(ctx sdk.Context, data types.FungibleTokenPacketDataV2, packet channeltypes.Packet, receivedCoins sdk.Coins) error {
+	var memo string
+
+	var nextForwardingPath *types.Forwarding
+	if len(data.Forwarding.Hops) == 1 {
+		memo = data.Forwarding.Memo
+		nextForwardingPath = nil
+	} else {
+		nextForwardingPath = &types.Forwarding{
+			Hops: data.Forwarding.Hops[1:],
+			Memo: data.Forwarding.Memo,
+		}
+	}
+
+	// sending from the forward escrow address to the original receiver address.
+	sender := types.GetForwardAddress(packet.DestinationPort, packet.DestinationChannel)
+
+	msg := types.NewMsgTransfer(
+		data.Forwarding.Hops[0].PortId,
+		data.Forwarding.Hops[0].ChannelId,
+		receivedCoins,
+		sender.String(),
+		data.Receiver,
+		packet.TimeoutHeight,
+		packet.TimeoutTimestamp,
+		memo,
+		nextForwardingPath,
+	)
+
+	resp, err := k.Transfer(ctx, msg)
+	if err != nil {
+		return err
+	}
+
+	k.SetForwardedPacket(ctx, data.Forwarding.Hops[0].PortId, data.Forwarding.Hops[0].ChannelId, resp.Sequence, packet)
+	return nil
+}
+
+// getReceiverFromPacketData returns either the sender specified in the packet data or the forwarding address
+// if there are still hops left to perform.
+func getReceiverFromPacketData(data types.FungibleTokenPacketDataV2, portID, channelID string) (sdk.AccAddress, error) {
+	receiver, err := sdk.AccAddressFromBech32(data.Receiver)
+	if err != nil {
+		return nil, errorsmod.Wrapf(ibcerrors.ErrInvalidAddress, "failed to decode receiver address %s: %v", data.Receiver, err)
+	}
+
+	if data.ShouldBeForwarded() {
+		receiver = types.GetForwardAddress(portID, channelID)
+	}
+
+	return receiver, nil
+}
diff --git a/modules/apps/transfer/keeper/relay.go b/modules/apps/transfer/keeper/relay.go
index 928dca8121a..8b58787170d 100644
--- a/modules/apps/transfer/keeper/relay.go
+++ b/modules/apps/transfer/keeper/relay.go
@@ -169,19 +169,9 @@ func (k Keeper) OnRecvPacket(ctx sdk.Context, packet channeltypes.Packet, data t
 		return false, types.ErrReceiveDisabled
 	}
 
-	var (
-		err           error
-		receiver      sdk.AccAddress // final receiver of tokens if there is no forwarding, otherwise, receiver in the next hop
-		finalReceiver sdk.AccAddress // final receiver of tokens if there is forwarding
-	)
-
-	receiver, err = sdk.AccAddressFromBech32(data.Receiver)
+	receiver, err := getReceiverFromPacketData(data, packet.DestinationPort, packet.DestinationChannel)
 	if err != nil {
-		return false, errorsmod.Wrapf(ibcerrors.ErrInvalidAddress, "failed to decode receiver address %s: %v", data.Receiver, err)
-	}
-	if data.Forwarding != nil && len(data.Forwarding.Hops) > 0 {
-		finalReceiver = receiver // , _ = sdk.AccAddressFromBech32(data.Receiver)
-		receiver = types.GetForwardAddress(packet.DestinationPort, packet.DestinationChannel)
+		return false, err
 	}
 
 	var receivedCoins sdk.Coins
@@ -272,39 +262,11 @@ func (k Keeper) OnRecvPacket(ctx sdk.Context, packet channeltypes.Packet, data t
 		receivedCoins = append(receivedCoins, voucher)
 	}
 
-	// Adding forwarding logic
-	if data.Forwarding != nil && len(data.Forwarding.Hops) > 0 {
-		memo := ""
-
-		var nextForwarding *types.Forwarding
-		if len(data.Forwarding.Hops) == 1 {
-			memo = data.Forwarding.Memo
-			nextForwarding = nil
-		} else {
-			nextForwarding = &types.Forwarding{
-				Hops: data.Forwarding.Hops[1:],
-				Memo: data.Forwarding.Memo,
-			}
-		}
-
-		msg := types.NewMsgTransfer(
-			data.Forwarding.Hops[0].PortId,
-			data.Forwarding.Hops[0].ChannelId,
-			receivedCoins,
-			receiver.String(),
-			finalReceiver.String(),
-			packet.TimeoutHeight,
-			packet.TimeoutTimestamp,
-			memo,
-			nextForwarding,
-		)
-
-		resp, err := k.Transfer(ctx, msg)
-		if err != nil {
+	if data.ShouldBeForwarded() {
+		// we are now sending from the forward escrow address to the final receiver address.
+		if err := k.forwardPacket(ctx, data, packet, receivedCoins); err != nil {
 			return false, err
 		}
-
-		k.SetForwardedPacket(ctx, data.Forwarding.Hops[0].PortId, data.Forwarding.Hops[0].ChannelId, resp.Sequence, packet)
 		return true, nil
 	}
 
diff --git a/modules/apps/transfer/types/packet.go b/modules/apps/transfer/types/packet.go
index fa1a45fadec..b00ccc6e957 100644
--- a/modules/apps/transfer/types/packet.go
+++ b/modules/apps/transfer/types/packet.go
@@ -196,3 +196,8 @@ func (ftpd FungibleTokenPacketDataV2) GetCustomPacketData(key string) interface{
 func (ftpd FungibleTokenPacketDataV2) GetPacketSender(sourcePortID string) string {
 	return ftpd.Sender
 }
+
+// ShouldBeForwarded determines if the packet should be forwarded to the next hop.
+func (ftpd FungibleTokenPacketDataV2) ShouldBeForwarded() bool {
+	return ftpd.Forwarding != nil && len(ftpd.Forwarding.Hops) > 0
+}