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Recognize PO product receipt as an actual cost instead of a committed cost against a Project

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Posted on by UAli

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Hi,

We have been testing on project accounting to understand suitability of managing fixed price projects for our renewables business.

We are wondering if there is a way to recognize PO costs for a goods receipt on a project as actual costs rather than just a committed cost? The reason we need to see it as an actual cost is to ensure when we run the revenue recognition calculation then it shows the revenue to be accrued in relation to the cost. Commited costs don’t get included in the revenue recognition, and until the supplier invoice is not processed it does not turn the cost into an actual cost.

Suppliers sometimes don’t invoice us for weeks after the good receipt so it’s not ideal to have to wait till the invoice is processed.

Thanks

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Dynamics 365 Finance

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Holly Huffman 6,538 Super User 2025 Season 2 on at

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Good morning, afternoon, or evening :) depending on your location!

To address this scenario in Microsoft Dynamics 365, you can configure the system to recognize purchase order (PO) costs for goods receipts as actual costs rather than committed costs. This ensures that the revenue recognition calculation includes these costs, even before the supplier invoice is processed. Here's how you can achieve this:

Enable Accruals for Purchase Receipts:

Navigate to Accounts Payable Parameters and enable the option to Post Product Receipts to Ledger. This allows the system to record accrued costs for goods receipts directly in the ledger.

For procurement categories, ensure that the Accrue Purchase Expense on Receipt option is selected under Purchasing Policies.

Map Procurement Categories to Project Categories:

Align the procurement categories with project categories to ensure that the financial impact of purchase accruals is correctly reflected in both the general ledger and project accounting.

Posting Setup:

Configure the Purchase Expenditure Un-Invoiced and Purchase Accrual Accounts in the posting setup. These accounts will be used to track the financial update of the product receipt.

Impact on Project Information:

While posting a product receipt generates a voucher in the ledger, it does not directly impact project information. However, you can use this setup to reflect the accrued costs in project reports and revenue recognition calculations.

Hope this helps!

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André Arnaud de Cal... 301,148 Super User 2025 Season 2 on at

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Hi UAli,

In Dynamics 365 Finance and Operations, cost are only considered as financially complete when the vendor invoice is posted. Can you tell more about the usage of the purchase orders? Are you ordering goods, services or both?

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UAli 167 on at

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Hi Andre,

Yes it’s for goods and services, such as third party labour costs (for installing solar panels) and also for parts such as solar panels and other hardware.

We ideally do not want to have to manually journal costs into the project each month based on goods receipts (where the supplier has not invoiced yet). The system should really account for the cost as an actual cost when the receipt journal is posted, technically at that point it’s a cost which we have incurred and we have posted the receipt to accept the goods or services.

Any suggestions?

Thanks

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