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[Andrew Rutledge]

Hi All,

We implemented Item charges, specifically for freight, at the beginning of the year. Now when I reconcile our inventory accounts, they’re thrown off by some of them.

Here’s an example-
A Transfer Order is created and the material is shipped on 2/26. The material arrives at its designated location on 3/2. In Nav, the shipment from the departing location is posted on 2/26 and the receipt at the destination is posted on 3/2. We receive a bill from the carrier with a date of 2/26 (when the material ships), so we will post the invoice on 2/26 in NAV.
Item Charges must be tied to the posted transfer receipt, not the posted transfer shipment. This means that when we tie the item charge to the 3/2 transfer receipt and post the invoice on 2/26, the G/L recognizes the freight charge on 2/26 while the inventory subledger does not recognize the charge until 3/2. This causes our inventory subledger to be undervalued and not agree with the General Ledger balance as of 2/28 EOM.

Has anyone encountered this issue? I had to look into these variances on a case-by-case basis and it can be very time consuming. From my perspective, our internal process is correct. I can’t seem to figure out what we could change in order for the two to agree.

Any advice would be helpful.

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Andrew Rutledge
Staff Accountant
Marine Ingredients
Mount Bethel PA
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[Andrew Rutledge]

Still spinning my gears over here a bit. Any ideas, people?

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Andrew Rutledge
Staff Accountant
Marine Ingredients
Mount Bethel PA
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[Cynthia Priebe]

You are correct the value from Item Charge will not be recognized in inventory reporting until the receipt date even if the underlying Value Entry posting date from the Purchase invoice is earlier.

However, I would think that your inventory valuation and Inventory to G/L Reconciliation should still report correctly. What purchase account are you using to post the Charge Item? Possibly this is not defined as the correct account in Gen. Posting Setup? 

Is it possible that the Purch. Account for the Gen. Bus. Posting and Gen. Prod. Posting Group combination may be defined as an inventory account rather than a purchase expense account?

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Cynthia Priebe, MCTS, DCP
Senior Business Analyst and Project Manager
Liberty Grove Software
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[Andrew Rutledge]

Hi Cynthia,

Thanks for your reply. The Inventory to G/L Reconciliation report is incorrect as of 2/28 EOM. The G/L has the item charges rolled into inventory on the invoice post date in February (which is what we want), but the subledger did not recognize that value should be on the G/L until March 2nd, when the transfer receipt was posted.

The Inventory to G/L Reconciliation matches from March 2nd onward (The date of the transfer receipt), but that doesn’t really help much when i’m reconciling for February month-end.

Also, the Item Charge’s purchase account in its Gen. Bus. and Gen Prod. Posting groups is set to an expense clearing account, not an inventory account.

Thanks for the advice!

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Andrew Rutledge
Staff Accountant
Marine Ingredients
Mount Bethel PA
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[John Hawkins]

When assigning Item Charges, NAV will use the posting date of the Item Ledger Entry to determine when the cost of the Item is affected and not the posting date of the document that you created to assign the Item Charges.  This is why your GL balance will be correct in February but the subledger won’t actually realize the change in the Item’s cost until March.  You may want to consider accruing any Item Charges that cross months so that you are realizing your expenses in the correct month, and then posting the document with the Item Charge with the same date as the original document that you want to update the cost.

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John Hawkins
Accounting Systems Manager
Wilks Brothers
Cisco TX
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[Ramin Marghi]

Hi Andrew,

For the purposes of reconciliation, it might be pertinent to build a Jet Report to identify these scenarios where the Posting Date of an Item Charge Purchase Document and the ‘source item entry’ it’s being applied to are in different periods and use that.

Alternatively you could also have the base Inventory-G/L Reconciliation (RDLC) report modified to add in a column for “Item Charge Accruals” to help with you rec.

Naturally some analysis would need to occur to pinpoint the exact logic you’re looking for for either of these options, but I thought I’d throw that out there to start the discussion/thought process around this.

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Ramin Marghi , CPA, CGA
CPA, CGA | ERP Consultant
Catapult ERP
VANCOUVER BC
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[Andrew Rutledge]

Hey Ramin,

Thanks for the ideas. They were helpful. I have developed a way to look at these sort of discrepancies through the Value Entries Table. If I set parameters for the “Valuation Date” field to display the current month, with the “Posting Date” as the month prior, I see that all the item charges in question are displayed. This will help me in the time being, but ultimately we will want to find a way to bring the subledger and G/L in agreement.

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Andrew Rutledge
Staff Accountant
Marine Ingredients
Mount Bethel PA
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[Ramin Marghi]

Hi Andrew,

You know my (and many others’ on here) mantra — whenever possible I try to avoid customizations, but if the reporting workaround doesn’t work for you, ultimately you might want to consider a customization of the Item Charge Assignment to also be able to pull in the Transfer Shipment:

Currently it’s only “Transfer Receipts”, but if you had the option to attribute it to the “Transfer Shipment”, it seems this would resolve the issue you’re encountering.

But this is just thinking out loud — you’d want a little bit of preliminary analysis and feasibility work done before going down this path.

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Ramin Marghi , CPA, CGA
CPA, CGA | ERP Consultant
Catapult
VANCOUVER BC
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[Alex Chow]

Yes, this is what’s called a Abnormal Posting Date. This is a term I made up:
Confessions of a Dynamics NAV Consultant

Dynamicsnavconsultant		remove preview
Confessions of a Dynamics NAV Consultant Abnormal posting date entries happens when the Posting Date of the receipt/shipments of inventory is after the Posting Date of the invoice. Why does this happen? You’ll need to ask your CFO or Controller. Typically, I found this more in return orders where the receipt of the product is a certain date, and the accounting department decides to post the credit memo in prior dates. View this on Dynamicsnavconsultant >

Basically, whenever you have the cost of the value of the inventory (value entry) earlier than the date when the inventory posting (item ledger) occurred. 

The blog has a report you can use to reconcile the inventory for any entries with the abnormal posting dates. You will need to use this as a supplement to your inventory valuation reports.

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Alex Chow [Designation]
Dynamics NAV MVP
AP Commerce
Los Angeles CA
Blog: http://www.dynamicsnavconsultant.com
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