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Dynamics 365 Community / Blogs / Mansi Soni’s Knowledge Junction - Business Cent... / Understanding Expected Cost...

Understanding Expected Cost Posting in Microsoft Dynamics 365 Business Central

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Mansi Soni Profile Picture Mansi Soni 8,869 Super User 2025 Season 2
In every business, there’s often a gap between when goods are received and when the corresponding invoice is received. To maintain accurate financial reporting and inventory valuation during this gap, Microsoft Dynamics 365 Business Central introduces a smart feature - Expected Cost Posting.

Expected costs represent the estimated value of an item’s cost that is recorded before the actual invoice is posted. This allows businesses to reflect the financial impact of goods received (or shipped) even when the supplier invoice hasn’t yet arrived.

What Are Expected Costs?

Expected costs are essentially temporary or interim postings that estimate the cost of an item transaction until the actual invoice is received.

When a company receives goods but hasn’t received the supplier invoice, Business Central records a value entry using the expected cost. This entry affects inventory valuation immediately - ensuring your stock values remain up to date.

However, these costs are not automatically reflected in the General Ledger (G/L) unless configured to do so.

Managing Expected Cost Posting to G/L 

Expected costs apply only to item transactions - not to other transaction types like capacity or item charges.

If you’ve only posted the quantity of a purchase (for example, marked the order as Received but not Invoiced), then:
  • The inventory value will update,
  • But the General Ledger will not, unless you enable the Expected Cost Posting to G/L setting.
Once this setting is activated, the expected cost is automatically posted to interim accounts at the time of receipt. When the invoice is later posted, these interim accounts are cleared and the actual cost is posted to the main inventory account - ensuring accuracy and reconciliation.
To support traceability, Business Central also shows the expected cost amount in the invoiced value entry to balance the interim postings.

Prerequisites for Posting Expected Costs

Before expected costs can flow properly into the system, you need to ensure the following setups are in place:

1. Inventory Setup
  • Enable both Automatic Cost Posting and Expected Cost Posting to G/L.
2. Inventory Posting Setup
  • Verify the Inventory Account and Inventory Account (Interim) for the respective Location Code and Inventory Posting Group.
3. General Posting Setup
  • Check the Inventory Accrual Account (Interim) for the relevant General Business Posting Group and General Product Posting Group.
4. Purchase & Payables Setup
  • If your business doesn’t require the Vendor Invoice No. at the time of receiving goods, uncheck the Ext. Doc. No. Mandatory field.

Example: Expected Cost Posting Flow

Let’s break down a simple scenario to understand how expected cost posting works in practice.

Step 1 - Posting a Purchase Order as Received
  • Expected cost = LCY 100.00
  • At this stage, the goods are received but not yet invoiced.
Value Entries
Posting DateEntry TypeCost Amount (Expected)Expected Cost Posted to G/LExpected CostItem Ledger Entry No.Entry No.
01-01-20Direct Cost100.00100.00Yes11
General Ledger Entries

Posting DateG/L AccountAccount No.AmountEntry No.
01-01-20Inventory Account (Interim)2131100.001
01-01-20Inventory Accrual Account (Interim)5530-100.002

Here, Business Central posts the expected cost to interim accounts, maintaining a provisional impact on the G/L.

Step 2 - Posting the Purchase Order as Invoiced

Later, when the invoice is received, the actual cost is LCY 105.00.

Value Entries

Posting DateCost Amount (Actual)Cost Amount (Expected)Cost Posted to G/LExpected CostItem Ledger Entry No.Entry No.
01-15-20105.00-100.00105.00No12

General Ledger Entries

Posting DateG/L AccountAccount No.AmountEntry No.
01-15-20Inventory Account (Interim)2131-100.003
01-15-20Inventory Accrual Account (Interim)5530100.004
01-15-20Direct Cost Applied Account7291-105.006
01-15-20Inventory Account2130105.005

After invoicing, the system automatically reverses the interim postings and posts the actual cost to the main inventory account - giving a clear, reconciled financial picture.

Key Takeaways

Expected Costs help ensure your financials reflect real-time inventory impact, even before invoices are posted.

When configured, Expected Cost Posting to G/L bridges the gap between operational transactions and financial accounting.

The use of interim accounts ensures clarity, traceability, and auditability in cost postings.

Final Thoughts

Expected Cost Posting in Business Central is a subtle yet powerful feature that promotes financial accuracy, inventory transparency, and timely reporting - especially for businesses dealing with long supply chains or delayed invoicing.

By configuring it properly, organizations can make sure that both their inventory valuation and general ledger stay synchronized - without waiting for the paperwork to catch up.

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