Specifying advanced inventory management settings

The Advanced inventory management settings include the following:

Stock transactions methodology.
Sales return flow.
Purchase return flow.
Inventory consumed in the Work order.

Stock transactions methodology

The stock transactions methodology defines when inventory cost is registered.

To set up the stock transactions methodology:

In the Accounting policy window, on the Advanced inventory management tab, in the Stock transactions methodology section, select one of the following options:

Option

Description

Anglo-Saxon

The following rules apply:

Posting a supplier invoice registers inventory cost and increases the stock level.
Posting sales invoice increases the cost of goods sold (COGS) and decreases the stock level.

Continental

The following rules apply:

Posting a supplier invoice registers inventory cost.
Posting a sales invoice increases COGS.
Posting a goods issue decreases the stock level.
Posting a goods receipt increases the stock level.

Sales return flow

The sales return flow defines the steps required to account for the goods that a customer returns to your company. For instance, this can happen if the goods were damaged during delivery to the customer.

To set up the sales return flow:

In the Accounting policy window, on the Advanced inventory management tab, in the Sales return flow section, select one of the following options:

Option

Description

Credit note document posts all entries, including inventory

The sales return flow requires that you post only a credit note for the goods returned.

This results in the following:

The accounts receivable or customer’s advance payments are adjusted by the value of the returned goods.
The stock level is increased by the quantity of the returned goods.

Credit note document posts customer balance, Goods receipt posts inventory entries

The sales flow requires that you do the following:

Post a credit note for the returned goods.
This adjusts the accounts receivable or customer’s advance payments by the value of the returned goods.
Post a goods receipt for the returned goods.
This increases the stock level by the quantity of the returned goods.

Purchase return flow

The purchase return flow defines the steps required to account for the goods that you return to a supplier. For instance, this can happen if the goods are damaged or do not meet your requirements.

To set up the purchase return flow:

In the Accounting policy window, on the Advanced inventory management tab, in the Purchase return flow section, select one of the following options:

Option

Description

Debit note document posts all entries, including inventory

The purchase return flow requires that you post only a debit note for the goods returned.

This results in the following:

The accounts payable or advance payments to suppliers are adjusted by the value of the returned goods.
The stock level is decreased by the quantity of the returned goods.

Debit note document posts supplier balance, Goods issue posts inventory entries

The purchase return flow requires that you do the following:

Post a debit note for the returned goods.
This adjusts the accounts payable or advance payments to suppliers by the value of the returned goods.
Post a goods issue for the returned goods.
This decreases the stock level by the quantity of the returned goods.

Inventory consumed in the work order

The Inventory consumption on work orders settings are available if the Enable Services subsystem checkbox is selected in Settings > Accounting settings > Service.

The Inventory consumption on work orders settings define the rules for recording the cost of inventory consumed when completing work orders. The consumed inventory includes the inventory specified in a work order in the Inventory consumption section and on the Goods for sale tab.

To select the rules for recording the cost of consumed inventory:

In the Accounting policy window, on the Advanced inventory management tab, in the Inventory consumption on work orders section, select one of the following options:

Option

Description

Charge to expenses manually by issuing Inventory transfer

Posting an inventory transfer based on a work order records the cost of consumed inventory.

Select this option if your business process requires a separate inventory transfer document for registering inventory consumption.

Charge to expenses automatically on Work order completion

Posting a completed work order records the cost of consumed inventory.

Select this option if your business process does not require a separate inventory transfer document for registering inventory consumption.

Inventory dispatching strategy

The inventory dispatching strategy states which goods are dispatched first, company's own goods or goods received from third parties. The inventory dispatching strategy applies to goods issues (with Operation = Sale to customer) and sales invoices.

To define the inventory dispatching strategy:

In the Accounting policy window, on the Advanced inventory management tab, in the Inventory dispatching strategy section, select either of the following options:

Option	Description
Dispatch own inventory first	Goods issues (with Operation = Sale to customer) and sales invoices register dispatch of a company's own inventory first, then dispatch of a third-party's inventory. For instance, you receive 5 tables from a supplier and post a goods receipt with Operation = Purchase from supplier. Then you receive 4 tables from a third party and post a goods receipt with Operation = Receipt from a third party. This makes 5 tables of your company's own inventory and 4 tables of the third party's inventory available in stock. Suppose, you sell 6 tables to a customer and post a sales invoice. Then the sales invoice registers dispatch of 5 tables as your company's own inventory and 1 table as a third party's inventory.
Dispatch third party inventory first	Goods issues (with Operation = Sale to customer) and sales invoices register dispatch of a third-party's inventory first, then dispatch of a company's own inventory. For instance, you receive 5 tables from a supplier and post a goods receipt with Operation = Purchase from supplier. Then you receive 4 tables from a third party and post a goods receipt with Operation = Receipt from a third party. This makes 5 tables of your company's own inventory and 4 tables of the third party's inventory available in stock. Suppose, you sell 6 tables to a customer and post a sales invoice. Then the sales invoice registers dispatch of 4 tables as a third party's inventory and 2 tables as your company's own inventory.

Option

Description

Dispatch own inventory first

Goods issues (with Operation = Sale to customer) and sales invoices register dispatch of a company's own inventory first, then dispatch of a third-party's inventory. For instance, you receive 5 tables from a supplier and post a goods receipt with Operation = Purchase from supplier. Then you receive 4 tables from a third party and post a goods receipt with Operation = Receipt from a third party. This makes 5 tables of your company's own inventory and 4 tables of the third party's inventory available in stock. Suppose, you sell 6 tables to a customer and post a sales invoice. Then the sales invoice registers dispatch of 5 tables as your company's own inventory and 1 table as a third party's inventory.

Dispatch third party inventory first

Goods issues (with Operation = Sale to customer) and sales invoices register dispatch of a third-party's inventory first, then dispatch of a company's own inventory. For instance, you receive 5 tables from a supplier and post a goods receipt with Operation = Purchase from supplier. Then you receive 4 tables from a third party and post a goods receipt with Operation = Receipt from a third party. This makes 5 tables of your company's own inventory and 4 tables of the third party's inventory available in stock. Suppose, you sell 6 tables to a customer and post a sales invoice. Then the sales invoice registers dispatch of 4 tables as a third party's inventory and 2 tables as your company's own inventory.

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