Wednesday, 12 November 2014

Tutorial: Understanding Inventory Period Management in Microsoft Dynamics NAV

Inventory periods are used in Microsoft Dynamics NAV to manage the posting of adjustment entries in the inventory. Unless the inventory periods are closed on a monthly basis, the adjusting entries will be posted in the original transaction period. Creating and closing the inventory periods prevents the inventory adjustments from being posted in that period. So, if you have created and closed an inventory period, and the posting date of an original transaction falls within this period, then the adjustment value will not be posted in this closed inventory period; instead it will be posted on the 1st day of the 1st open inventory period. This ensures that the G/L value of inventory and cost of goods sold don’t change after the printing of financial statements for a month. 

Note: The procedure for inventory management discussed below is shown using Microsoft Dynamics NAV 2013 R2 interface; however it can also be used in previous as well as the subsequent versions of NAV, including the new Dynamics NAV 2015 upgrade.

Accessing the Inventory Period page

You can access the Inventory Period page in many ways, depending on what suits your comfort. The two most commonly used ways to access the Inventory Periods are:

1. Direct Access: Inventory Period page can be accessed from the Financial Management directly. 
Departments > Financial Management > Inventory

2. From Accounting Periods: Alternatively, many users may like to manage their inventory periods simultaneously with their accounting periods. Such users can browse to the Inventory Period page by clicking on the Inventory Period icon in the toolbar present on the Accounting periods page.

Departments > Financial Management > Periodic Activities > Fiscal Year > Accounting Periods

Creating Inventory Periods: 

Inventory Periods are created in the Inventory Period table by adding new records in the table along with an ending date for each record. Inventory Periods are defined by the time interval between the ending dates of two entries in the Inventory Period table. Two Inventory Periods have been defined in the screenshot below; you can define more periods by adding more entries and end dates in the table.

Closing Inventory periods: 

As discussed earlier, Inventory Periods are closed in Dynamics NAV to prevent any further adjustments in the entries. Thus, NAV requires all the outbound transactions to be applied before any Inventory Period can be closed; if any outbound transaction remains unapplied, NAV will prevent the Inventory Period from closing. Hence, the user must run the Adjust Cost Entries before he/she tries to close the Inventory Period. Also, the user needs to run Post Cost to G/L function, and then run a test report to see if any step is missing. The Test Report checks all the parameters for closing a period, and ensures that requisites for the closure have been met. If there are any hindrances/errors in closing the report, the Test Report enlists them. Two common errors are: 

1.Item Ledger Entry *** is Open: This means that there is an open outbound transaction in the period, which needs to be fixed before it can be closed. 

2.Unadjusted Entries in the period: This indicates that “Adjust Cost Entries” or “Post To G/L” hasn’t been adjusted, so the user needs to adjust them before he can close the period.
Once the Test Report is positive, i.e. free of errors, user can run the Close Period function to close the period.  

Hence, the step-by-step procedure for closing an Inventory Period:
1. Run the Adjust Cost Entries
2. Run the Post Cost to G/L function
3. Run Test Report.
4. Run Close Period Function.

Reopening an Inventory Period: 

As, NAV does not allow any changes to be made in a closed Inventory Period, if you need to make any edits in a closed period, you need to reopen it. This can be done by using the Open Period function. Once the period has been reopened, you can make any edits in the transaction entries, like any other open periods. Also, to close the period, you will have to follow the same closing steps, as discussed above.

Taken from the Original Post :

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