• From: Pretoria, South Africa
  • Registered: 01/15/2010
  • Posts: 16

Topic: Cost Difference on Supplier Invoice

Hi all,

Bear with me on this one, it might be a confusing post to illustrate the problem but perhaps someone can shed some light. Also, sorry for the image urls, forum doesn't cater for tables structures well and my img tag seems to be off.

Here's the scenario:
Inspect GL postings of the same set of transactions posted in different order on a single, purchase type, stock item. Basically I was varying the order of supplier invoice (GRV) to direct customer invoice (invoice) and looking at the affects on the GL. Emphasis being on C.O.G.S. vs Inventory.

The tests was run on Version 2.2.3 Build 12.01.2010 and a clean (no transactions) db restore was done before each test. "Allow Negative Inventory" was enabled in "System and General GL Setup".

Test1: GRV then Invoice (Without setting Std Cost)
No problems here. Cost of Sales and Inventory reflect the correct figures.

Test2: GRV then Invoice (Std Cost set to 80)
No difference from Test1. Cost of Sales and Inventory reflect the correct figures.

Test3: Invoice then GRV (Without setting Std Cost)
Problem here. Inventory hasn't been moved to Cost of Sales.

Test4: Invoice then GRV (Std Cost set to 80)
Problem here. Inventory was moved with original Delivery Note, but reversed again with "Cost. diff" on GRV.


So it seems "Cost. Diff" gets applied in the wrong situation. Had it been applied in Test3 and not Test4 then both would have had the correct end result. Or am I totally missing the point here?

Jacques

  • joe
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Re: Cost Difference on Supplier Invoice

Test3 and Test4: I guess you mean GRN (not GRV). How did you succeed to invoice non received GRNs?

This mechanism GRN, Invoice, creditnotes, voiding the items etc. has been rigoriously tested two years ago. And it should work.

/Joe

3 Reply by stildalf (edited by stildalf 01/19/2010 10:04:14 am)

  • From: Pretoria, South Africa
  • Registered: 01/15/2010
  • Posts: 16

Re: Cost Difference on Supplier Invoice

Sorry Joe, my terminology is obviously a bit misleading.

My GRV implies a GRN and posted Supplier Invoice.
My Invoice imples a Customer Invoice (and obviously Delivery Note).

I suppose I should ask this: how does FA handle Pre-invoicing ie. Customer Invoice of an item before Supplier Invoice of the same item?

  • joe
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Re: Cost Difference on Supplier Invoice

No problems stildalf.
If there are deliveries during the period from GRN to supplier invoice, these price differences are updated when the supplier invoice is entered. But only if there were differences.

/Joe

5 Reply by stildalf (edited by stildalf 01/19/2010 11:52:37 am)

  • From: Pretoria, South Africa
  • Registered: 01/15/2010
  • Posts: 16

Re: Cost Difference on Supplier Invoice

I see a problem:

Compare Test2 with Test4.

In Test2, after having received and issued the item - we sit with a value of 80 in the Cost of Sales account. (As it should be)

In Test4, after having first issued and then received - we sit with a value of 80 in the Inventory account. (Shouldn' be there - must be in Cost of Sales)

smile

  • joe
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Re: Cost Difference on Supplier Invoice

If you deliver items before any are received how is that possible? I know it can be done, but FA assumes that if you start delivering items, these items must have an initial value per item. This can be set initially in Items and Inventory, Standard Costs.
This is the danger having the stock check disabled. It is only delivering during the period from GRN to supplier invoice the price will change and only if there really is a price change from GRN to supplier invoice.

  • Registered: 12/25/2007
  • Posts: 2,447

Re: Cost Difference on Supplier Invoice

I' not sure I understand right all the problem, but defnitely all the GL postings should be  done right regardless of status of  'Allow Negative Invnentory' option, or the option should be removed and negative inventory definitely forbidden.
Isn't this problem related to make GL posting to inventory account directly on Supp Invoice and not on GRN receival?

Janusz

  • joe
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Re: Cost Difference on Supplier Invoice

The GL Postings are done correctly. If the stock is negative the standard cost for the item is 0.
Default the 'Allow negative stock' is NOT marked. Some business doesn't need to keep check of their stock. For some reason. Therefore negative stock gives no values in the inventory account.
So as I see here, you should operate with the 'Allow negative stock' unmarked, and we avoid these questions.
In other words, you should know what you are doing, if you mark this flag.

/Joe

  • Registered: 12/25/2007
  • Posts: 2,447

Re: Cost Difference on Supplier Invoice

If some business does not use stock control then all items sold should have 'Service' type set, and problem with cost update does not appear at all. 'Allow Negative Stock' option is not for this type of business. If your assumption is that there should be never negative inventory  to have right valuation,existence of this option make no sense.

As far as I understand the idea behind this option is to allow sales even when  items sold were not purchased from supplier yet. There is nothing weird in such quick sales operations in some type of ad hoc businesses, although for reliability reasons not often used.

Therefore I think we have one of the two cases: invalid option allowing negative inventory (while we cannot guarantee consistent inventory data in this case) or not complete cost update algorithm which fails in case described above.


Janusz

  • joe
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Re: Cost Difference on Supplier Invoice

Well, I am not the Judge. The option has been here all the time, without complains so far.

/Joe

  • joe
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Re: Cost Difference on Supplier Invoice

Stildalf,
You should immediately unmark the checkbox 'Allow Negative Inventory' in 'System and General GL Setup' (Setup tab).
Then goto Items and Inventory and check how much stock is negative for every item (Inventory and Item Status) . Write it down and then go to 'Inventory Adjustments'. Enter the number and the price (from your supplier) on every negative stock item so you get a positive stock.
Remember, you can always go to Inventory Adjustments to correct the stock qty and price.
If you need further correction of the price you can fine adjust it in Standard Cost lower right in Items and Inventory tab. This is usual if you know exactly how much the average standard cost is (or should be) now.

After these operations you should run without problems.

Maybe I should put this on the Wiki.


/Joe