GRN amount not correct

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the company i have worked with has just implemented AX system. There are some challenges we faced on which the recommendation i received is not so suitable or aligned with operation. Example: Wrong PO amount (like wrong unit price/ currency used) and was already receipts. The actual inventory has already been transferred and used in production ( batch order has been created and posted). It was already late when we noticed the big difference from its costing. The recommendation was to reversed the GRN, is this really the recommended solution? i really fell uncomfortable doing it. Inventory is no longer there so they want to increase the qty then perform the GRN reversal. Please help

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Fredrik Sætre 12,644 on at

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You should read up on physical and financial costing, costing methods and inventory closing.

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Fredrik Sætre 12,644 on at

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Assuming you are using FIFO costing methods or similar variable costing methods and not standard cost...

What basically happens is that your cost amount is used as a guesstimate (physical cost) until the actual cost (financial cost) is obtained. If an item is used as cost in a sale or production before financial cost is known and later it shows that the cost was different, then when inventory recalculation is performed, the costs are adjusted on the sales or production order.

Inventory closing is used to lock these records as the outbound is connected with an inbound cost and all is good. Closed transactions are not considered in the future

So important to know...

1. The cost price when doing an outbound transaction (sales or production order) can change.

2. Update your purchase order amounts to be as close as you can get as this is the physical cost price used until the financial price (vendor invoice) is registered. Big deviations can occur if these are misaligned and will give you some awefull experiences.

3. Always enter purchase and cost price when creating an item.

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Weaveriski 23,620 Moderator on at

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In a test system invoice the purchase order and then close inventory, the costs should flow through from the invoice, meaning the GRN cost is temporary, you could manually journal it for month end if that bad, but you cannot reverse it physically because it is not there to reverse (you have used it).

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Community Member on at

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Hi Fredrik, thank you so much for your clarification and assistance. I am now more ease on this approach compared to what was recommended.

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Community Member on at

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Thank you also Steven for the guidance, it helps me alot

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