Start using Inventory costing in company with serveral years of existing data

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Hello,

I have a customer that has an existing company (In their NAV 2013 installation) that has been in use for several years. They have run the Adjust Cost - Item Entries (795) job many times previously but have never posted the results to the G/L Accounts.

They would now like to start using both.

They want to start by setting the value and inventory level of all items to zero then enter the correct inventory and value in the Item Journal.

There are several sales/purchase orders that are still open. (Delivered/received but not invoiced)

The customer has accepted that:

1. they will have to make sure that everything that is delivered or received on sales/purchase documents must also be posted.

2. they will have to make manual correction entries in previous accounting years to remove any inventory adjustment postings that occur due to previously running the Adjust Cost job without posting.

3. that any items that may end up with zero inventory but with a cost value must me blocked and renamed Z-[number].

Put simply my preliminary plan is to

1. Run Adjust cost for all previous years.

2. Post step 1 to the G/L and manually remove these entries with "correction" postings in the current year.

3. Make sure all item entries fully invoiced.

4. Run Adjust cost for current year

5. Post step 4 to the G/L and manually remove these entries with "correction" postings in the current year.

6. Use the Physical Inventory Journal to reduce all inventory to Zero.

7. Run Adjust cost for current year

8. Post step 7 to the G/L and manually remove these entries with "correction" postings in the current year.

9. If any residual amounts exist (rounding problems or previous errors in NAV) then I plan to either unapply and reapply item entries or use the Revaluation Journal to solve these.

I have intentionally repeated the adjust cost and posting several times to make it easier to keep track of the postings created.

Has anyone tried to do this? If so any input would be greatly appreciated. I would like to hear of your experiences and any warnings about where to be careful or perhaps other solution possibilities.

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Jens Glathe 6,092 on at

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RE: Start using Inventory costing in company with serveral years of existing data

Hi Michael,

removing negative inventory is a precaution, nothing more. For negative stock, ACIE can't do its thing, the valuation will be postponed until positive stock (or zero) is reached again. If the inventory entries are sound, you could even leave the stock as it is.

Reducing the physical inventory to zero doesn't really do anything good, from my experience. It looks promising (close all applications, all valuation chains should be stopped), but it doesn't really have a good effect when your inventory entries are sound. It will kill items in transit, and unfinished orders, though. So, better not :)

The scenario changes entirely if the inventory entries are corrupted in any way. For example, sum of remaining quantity doesn't add up to quantity for an item by location code. Or you have iffy Item Application Entries. Or you have really strange Value Entries for whatever reason. We had all of it (previous screwups/bugs accumulated over time), and tried to contain the mess by posting everything to zero, correcting remaing balances with manual postings, and reopening the inventory with a physical inventory. As long as you consequently cut all ties with unfinished orders, this actually might work. If you don't, the bad things will ooze out of their containment into you current books. We finally went for the "Remove it to another dimension" approach. We archived the whole inventory tables, deleted the ledger entries (and reservation entries, and so on) and reopened with the current stock at hand. The "magic" part was connecting the unfinished orders again, and integrating the archive for history reasons where needed. This finally worked.

with best regards

Jens

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RE: Start using Inventory costing in company with serveral years of existing data

Hello Jens,

Thank you for your reply.

I have just finished using my process. However, your suggestion seems "simpler".

I will try your suggestion on my copy of the live database to see if there are any issues or if I can do this in the future. Simpler is usually better. :-)

Do we agree that, since both our solutions require removing negative inventory, they will also both require entering the new stock levels after completing the process?

I think that using the Physical Inventory Journal to first reduce all inventory to Zero and helps in identifying any residual value errors (rounding or otherwise) and these can be handled/removed right away to ensure the we have a "clean" base when starting.

I do anticipate the same problem with dimensions. Once I have tried your solution I will respond back with my experiences.

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Jens Glathe 6,092 on at

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RE: Start using Inventory costing in company with serveral years of existing data

Hi Michael,

if it worked, all is fine :) Re dimensions, yes, that's an issue. Microsoft is slowly advancing on this one to consistent dimension handling. Problem is, changes are almost impossible without maintaining historic dimensions, too.

with best regards

Jens

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RE: Start using Inventory costing in company with serveral years of existing data

Thank you to both Saurabh Shah and Jens Glathe.

I have completed the process using my process with a small change.

For each of the "old" years with posted the value amounts against each other. This way Debit/Credit postings balanced (0) each other out pr. year.

Almost everything went fine - I had a minor problem with dimensions. When I finished I had activated automatic Adjust Cost Item Entries in the Item setup. The customer had also activated a global requirement that Department dimensions must be entered. This resulted in an error when the Adjust Cost Item Entries Batch would run while posting.

The reason was that the old (Item) value entries had blank dimensions or old dimensions that were no longer used. The Adjust Cost Item Entrie batch does not permit posting a value entry with a dimension code that does not match the incoming value entry.

Together with the customer, we were able to update the dimension values on the value entries and this solved the issue.

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Jens Glathe 6,092 on at

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RE: Start using Inventory costing in company with serveral years of existing data

Hi Michael,

from personal experience, I wouldn't do it this way. I would:

- make a copy of the live system for testing purpose

- make sure that no negative stock exists

- make sure no inventory transactions take place when you do this

- run adjust cost for item ledger entries

- close all inventory accounting periods where the G/L accounting period is already closed (all closed years, at least). If necessary, force close the inventory periods (we have an extra function just for this).

- make sure the first date allowed for posting is a desired one. Check G/L Setup and User Setup for the user who will do the posting.

- check inventory posting setup and general posting setup if the desired accounts are entered. Probably I would make a special setup with dedicated accounts for the initial cleanup posting, but this depends on taste / compliance.

- in table 5811 "Post Value Entry to G/L", change the posting date of all entries to your initial date with a batch job.

- Run Report 1002 "Post Inventory Cost to G/L" with "Post by Entry". This can take a long time, many entries will be generated.

With that, the inventory costing history is posted into the G/L. I would suggest to make a check if the numbers match and are the desired ones. For this, Report 10138 "Inventory to G/L Reconcile" from the NA localization is a great and reliable tool. If G/L valuation matches inventory valuation, but you require other numbers, you can use the inventory revaluation journal to post them. But first, I would do:

- activate automatic inventory posting to G/L

Afterwards I would post the revaluation.

- close the inventory period (you need to run adjust cost with post to G/L for this), open a new one

- if necessary, change the posting setups to the "operational" accounts

- done :)

As you can see, any unfinished orders or partialially invoiced positions don't come into consideration for this. As long as your inventory postings are sound, this shouldn't be a concern.

with best regards

Jens

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Saurabh Shah 4,560 on at

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RE: Start using Inventory costing in company with serveral years of existing data

Hi,

I think your plan is good and can be followed. Just make sure that while running the Adjust Cost item entries batch, post to GL is selected. I also recommend to run Cost Post to GL batch manually each time after adjust cost batch get executed.

Regards,

Saurabh Shah

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