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Purchase Variance Entry Not Posting

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Posted on by Dharmesh

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Dear Team,

We have noticed that the Purchase Variance entry is not getting posted in our system, and request your guidance on the same.

Test Case:

>Item Price on Purchase Order Line: Rs.100

>Posted Purchase Receipt Line: Rs.100

>At the time of Purchase Invoice, Vendor sent Invoice with new Price: Rs.150

The system allows us to change Unit Price in Purchase Invoice Line and post the Invoice, but the difference amount of Rs.50 is not being posted as Purchase Variance. Total Rs.150 is posted in Purchase Account now

Kindly guide us on how this difference amount should be posted under the Purchase Variance

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Dynamics 365 Business Central

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Valentin Castravet 30,429 Super User 2025 Season 2 on at

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Purchase Variance Entry Not Posting

What setup do you have in the Inventory Setup Page? Do you have Automatic Cost Adjustment set to Always?

Valentin Castravet
Work: Zander ERP Services
Blog: Dynamics 365 Business Central Insights
LinkedIn: www.linkedin.com/in/valentin-c-0500a247/

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Rishabh Kanaskar 5,474 on at

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Purchase Variance Entry Not Posting

Hi,

In Business Central, Purchase Variance only posts automatically if the item’s inventory valuation method is set to Standard Cost. With FIFO or Average Cost, BC posts the invoice directly to the Purchase account and does not create a separate variance entry.

To have the Rs.50 variance posted separately:
> Check the item’s Inventory Posting Group and Inventory Valuation Method.
> For non-standard cost items, consider creating a manual adjustment journal or using Invoice Price Variance functionality via journals/extensions.

(If using NAV older version, and Standard Cost, ensure the Allow Invoice Price Variance setting is enabled in Purchases & Payables Setup.)

In your case, since the item posts Rs.150 directly, it indicates the item is not Standard Costed. Only switching to Standard Cost or using manual adjustment will show a separate variance.

Thanks

Rishabh

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Alex A 2,750 on at

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Purchase Variance Entry Not Posting

In Dynamics 365 Business Central, the behavior you described depends primarily on the item's Costing Method (found on the item's card under the Costing tab).

The Purchase Account (from General Posting Setup) always receives the invoiced amount (Rs.150), regardless of costing method—this reflects the actual liability to the vendor.

But the Rs.50 difference can only be reflected in the Value Entries after you run the Adjust Cost - Item Entries batch job.

- This process updates the inventory value and posts the variance to the appropriate accounts.

- Always run Adjust Cost - Item Entries after posting invoices with price differences.

- Optionally, enable automatic cost adjustment in Inventory Setup if you want this to happen routinely.

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YUN ZHU 93,872 Super User 2025 Season 2 on at

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Purchase Variance Entry Not Posting

Hi, hope the following can give you some hints as well.

https://learn.microsoft.com/en-us/dynamics365/business-central/design-details-variance?wt.mc_id=DX-MVP-5004336

Thanks

ZHU

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Gregory Mavrogeorgis 524 on at

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Purchase Variance Entry Not Posting

Hi,

You’re not seeing “Purchase Variance” because of how BC posts price diffs. In short:

Purchase Variance (PPV) is used mainly with Standard Cost items.

For FIFO/Average/LIFO/Specific, the invoice price difference normally adjusts inventory value (and later COGS), not PPV.

So in your test (100 at receipt, 150 at invoice), getting the full ₹150 to the Purchase account is expected if the item isn’t Standard Cost or if costs haven’t been adjusted to G/L yet.
Here’s a quick checklist to get the behavior you want:
1) Check the item’s costing method

Want PPV? Set the item to Standard Cost and set a Standard Cost value (e.g., 100).

If it’s FIFO/Average, BC will capitalize the extra ₹50 into inventory (or flow to COGS later) — no PPV.

2) Make sure the PPV account exists in posting setup

Go to General Posting Setup for the Gen. Bus. Posting Group / Gen. Prod. Posting Group you’re using.

Ensure Purchase Variance (G/L account) is filled in.

Also confirm Direct Cost Applied, Purchase, etc., are set correctly.

3) Let BC move the difference where it belongs

In Inventory Setup:

Turn on Automatic Cost Posting (or be ready to run the batch jobs).

Optionally Expected Cost Posting to G/L (not required for PPV, but good for matching timing).

Set Automatic Cost Adjustment to Always (or run it manually).

After you post the invoice, run Adjust Cost – Item Entries and Post Cost to G/L (if not automatic).

Standard Cost: the ₹50 goes to Purchase Variance.

Non-Standard: the ₹50 adjusts Inventory (and later hits COGS if already sold).

4) Sanity test

Create a Standard Cost item with Standard Cost = 100.

Post Receipt at 100, then Invoice at 150.

Run Adjust Cost + Post Cost to G/L.

You should see a posting to your Purchase Variance account for ~₹50.

5) If you still see everything going to Purchase

Re-check the item is Standard Cost (most common gotcha).

Confirm the correct Gen. Posting Setup row is the one being hit on that invoice.

Make sure Adjust Cost actually ran and Automatic Cost Posting isn’t off.

If you have find it helpful please mark it as a verified answer

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Pallavi Phade 2,649 on at

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Purchase Variance Entry Not Posting

Namaste @Dharmesh

Variance is calcuated incase of Items having Costing Method as "Standard "

Standard Cost is column Specifies the unit cost that is used as an estimation to be adjusted with variances later. It is typically used in assembly and production where costs can vary,

For Standard Costing Method items , you will get Value entries with Entry type as Variance . IF there is any diffierence in purchase invoice cost and standard cost .

For Other Costing Method items , You will get adjustment Entries in Entry Type as "Direct Cost" , Adjustment- YES

Best Example Explained

Actual cost – standard cost = variance

This is detailed MS Link for reference

https://learn.microsoft.com/en-us/dynamics365/business-central/design-details-variance

If you feel this helped , please mark as Verified

Regards

Pallavi Phade

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Valentin Castravet 30,429 Super User 2025 Season 2 on at

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Purchase Variance Entry Not Posting

Rishabh Kanaskar, your reply appears AI-assisted, but no tools or sources are cited. Please update your post with sources, or confirm it was not produced using AI

There is absolutely no "Allow Invoice Price Variance setting" in the Purchases & Payables setup page.

See Use AI responsibly in Writing effective responses in the community. Do not:

Copy/paste AI-generated answers without verification. AI can sound correct and still be wrong.

Conceal the use of AI. If AI assisted, say so so others can review for accuracy.

Thank you.

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CU25090638-0 237 on at

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Purchase Variance Entry Not Posting

Can you share the inventory setup and other configuration screenshots?

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Rishabh Kanaskar 5,474 on at

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Purchase Variance Entry Not Posting

Hi Valentin, kudos for your observation! I’ve added a note about the ‘Allow Invoice Price Variance’ checkbox specifically for NAV users, as this option existed in older NAV versions. In Business Central, this option is no longer available, and variances are handled directly based on the item's costing method.

Thanks

Rishabh

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Sumit Singh 8,815 on at

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Purchase Variance Entry Not Posting

Hi Dharmesh,

In Business Central, Purchase Price Variance only posts when you use Standard Costing. Business Central does create adjustment entries for FIFO, Average, and other actual-cost methods when invoice price differs from receipt price. Here’s the clarification:

For FIFO/Average costing, the system updates the item’s cost during purchase invoice posting and then runs cost adjustment (either automatically or via Adjust Cost - Item Entries).

This process creates Value Entries for the difference (Rs.50 in your case) and posts them to Inventory and COGS or related accounts—not to a “Purchase Variance” account (that’s only for Standard Cost).

To enable variance posting:

Set the item’s Costing Method = Standard.

Configure Purchase Variance Account in General Posting Setup.

Ensure Adjust Cost - Item Entries and Post to G/L are run after invoicing.

Official Microsoft documentation:

Design details: Variance in Business Central [1]

Design details costing methods - Business Central | Microsoft Learn

Please mark it “Verified” if it helps.

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