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Dynamics 365 Community / Forums / Microsoft Dynamics SL (Archived) / Negative Inventory
Microsoft Dynamics SL (Archived)

Negative Inventory

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Posted on by Cynthia Audain 1,348

Hi All

On doing some investigations, it seems like allowing inventory to go negative in the system can prevent setbacks in the company's operations.

As a result, I was just wondering if anyone using this option has come upon any adverse impacts in the inventory and in the GL or if there is something on using this feature I should take into consideration before implementing the same?

The Accountant is cautious in using the feature  when they hear "negative inventory" but so far in my testing I have not seen any problem in both the inventory and the GL.

Should I look out for an impact down the road or is there anything I overlooking?

Thanks for any input.

Regards

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  • Suggested answer
    Community Member Profile Picture
    Community Member on at

    Hi Lisa

    The problem depend on which valuation method setup in inventory item. If it is FIFO or LIFO, it will be a big problem. Because when you issue good with negative inventory, the cost of good sold will be the the last cost. If you receipt good with different price, different period, it will lead to unbalance cost of good sold account and inventory account in one period, the P&L and balance sheet won't show correct amount in each period, so of course the accounting department don't like it.

    If valuation method is standard, average... you will see it is difficult when tracking cost of good sold transaction.

  • Cynthia Audain Profile Picture
    Cynthia Audain 1,348 on at

    Hi Nam

    Thanks for the response.

    However I do not understand your last paragraph. Are you saying that it is 'difficult' or do you mean different when using Average and Standard valuation methods?

    In other words, will the system handle negative inventory seamlessly when average and standard valuation are being used?

    Regards

  • Suggested answer
    Community Member Profile Picture
    Community Member on at

    Hi Lisa

    I mean it's different, If you use valuation method is FIFO or LIFO you can track available cost of good sold of each PO, If you use valuation method is standard or average you can not do it. So, which valuation method is used depend on your business requirement.

  • Cynthia Audain Profile Picture
    Cynthia Audain 1,348 on at

    Nam

    So will it be better to use average and standard costing methods when dealing with negative inventory rather than Fifo and Lifo?

  • Verified answer
    Community Member Profile Picture
    Community Member on at

    Hi Lisa

    Each  valuation method has it's own pros and con, if your business require to issue negative inventory, I think  average or standard costing methods is better.

  • Cynthia Audain Profile Picture
    Cynthia Audain 1,348 on at

    Thanks for your input.  Appreciate it.

  • Bill Degnan Profile Picture
    Bill Degnan 660 on at

    Negative inventory can cause numerous problems in the system. To name a few:

    - You can not proper use lot/serial tracking

    - You run into problems if there are multiple inventory sites.

    - Users tend to develop bad habits by not processing receipts & transfers on a timely basis.

    - Inquiries and reports of actual available inventory quantities become unreliable.

    - There tends to be problems with placeholder records in various tables not being cleared properly

    - Physical inventories become very confusing.

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