RE: Financial Negative Inventory with a real time example?
Hi Dinesh,
In Dynamics there are two types of inventory effect based on document posting.
Physicals Inventory : Inventory received/dispatched but not invoiced , Product Receipt, Packing slip etc...
Financial Inventory: Once we invoice the document , physical inventory gets reversed and financial inventory gets posted. E.g. Purchase invoice, sales invoice, all inventory journals etc...
Now, Best practice always is , keep "Negative Physical" inventory turn off because we should not issue any inventory until we have the "On-hand" in our system. If we allow this then system will have quantity "-Ve"
Keep "Negative Financial Inventory" turn on , because once we have physical inventory in our system that means we have stock but not invoiced , so when we post any "Sales "Invoice" or any Inventory journal, it would post "-Ve" financial inventory which will get settle when we post invoice of available physical inventory.
Note: All inventory valuation in month end after inventory recalculation, calculates inventory cost based on total posted financial inventory.
So, always make sure that we close all physical inventory by posting invoices.
Include physical value is used when we post any "Physical inventory" transaction e.g. Product receipt or packing slip which will post a inventory value which is not actual value but estimated value, so till the the time we do not have financial inventory value posted, we can turn this option to use estimated value
