Why you have Negative Inventory Value with 0 Quantity – Navision 3.7b to Navision 5.0

Here are a couple of reasons why you would get inventory value if you have 0 quantities when you print Inventory Valuation report and Inventory to G/L Reconcile report as of a certain date.

Scenario 1:

If the adjust cost is processed on 7/31/07, and the Allow Posting From was 7/1/07 on General Ledger Setup, the following would occur:

 6/15/07 – Purchase Receipt – $10
6/28/07 – Ship and Invoice – $10
7/15/07 – Purchase Invoice – $12
7/31/07 – Additional Cost for the sale made on 6/28/07 – $2

In this case, when you print the inventory valuation as of 6/30/07, the inventory quantity would be 0 and the inventory value would be 0.

Scenario 2:
If the adjust cost is processed on 7/31/07, and the Allow Posting From was 6/1/07 on General Ledger Setup, the following would occur:

6/15/07 – Purchase Receipt – $10
6/28/07 – Ship and Invoice – $10
7/15/07 – Purchase Invoice – $12
6/28/07 – Additional Cost for the sale made on 6/28/07 – $2

In this case, when you print the inventory valuation as of 6/30/07, the inventory quantity would be 0 and the inventory value would be -$2.00.

Explaination
Navision will automatically post the additional cost to the original invoicing entry because that’s where the cost originally applies to. If Navision detects that the Allow Posting From is before the adjusting date, then it will use whatever the Posting Date is when the adjust cost is ran.

Scenario 3:
If the adjust cost is processed on 8/31/07, and the Allow Posting From was 7/1/07 on General Ledger Setup, the following would occur:

6/15/07 – Purchase Receipt – $10
6/28/07 – Ship and Invoice – $10
7/15/07 – Purchase Invoice – $12
8/31/07 – Additional Cost for the sale made on 6/28/07 – $2

In this case, when you print the inventory valuation as of 6/30/07, the inventory quantity would be 0 and the inventory value would be 0. When you print the inventory valuation as of 7/31/07, the inventory quantity would be 0, but the inventory value would be $2.00.

Explaination
Navision will automatically post the additional cost to the original invoicing entry because that’s where the cost originally applies to. If Navision detects that the Allow Posting From is before the adjusting date, then it will use whatever the Posting Date is when the adjust cost is ran. In this example, since the Adjust Cost process posting date is 8/31/07, it will use this date as the Posting Date for the adjusting entry.

  1. Alex:

    What about a scenario like this (assume average costing, costing averaged by item):

    9/1/09: purchase invoice $10 in Location A.
    9/2/09: freight applied $2 in Location A.
    9/3/09: purchase invoice $10 in Location B.
    9/4/09: freight applied $4 in Location B.
    –Average cost = $13 for 2 units.
    9/5/09: sales invoice in Location A -$13.
    9/5/09: sales invoice in Location B -$13.

    9/6/09: Value in Location A $-1 (0 on hand)
    9/6/09: Value in Location B $+1 (0 on hand)

    Is this a possibility? I think this is happening to us often. (And this only becomes more complex when costs are accrued to incoming receipts AFTER the product has been sold.)

  2. Since your costing by item instead of by location, you shouldn’t do cost analysis by location. You should always run your valuation by the item WITHOUT location filter. All NAV implementations we do with average cost, we ALWAYS set the Average Cost Calc Type to Item & Location Code & Variant.

  3. Some considerations that may be helpful.

    As a general point if interest, with NAV2009SP1, perhaps already in NAV5, Value Entries posting date is at the date of the Purchase.

    Certain conditions apply to “Allow Posting From date”:

    With Automatic Cost Adjustment and Posting options in NAV 2009 SP1, but inventory periods not closed (why? – because there are negative stock on some items, which prohibit closing invenotory periods), there is a change in the logic. Occasionally when posting sales documents, the sytem creates an error for wanting to post addjustments before Allow Posting From date. The Posting Dates on the document is definitely in the current allowed period.

    To date I have not encountered a solution other than to tempory allowing the user to post in the older period.

  4. Change:
    As a general point if interest, with NAV2009SP1, perhaps already in NAV5, Value Entries cost dates is at the Posting Date of the Purchase Invoice, rather than Posting Date of Purchase Receipt.

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