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Purchase Accruals and Consignment Inventory

Managing purchase accruals or purchasing consignment inventory is difficult to solve but easily managed with the Purchase Accruals and Consignment extension for Business Central. We have combined the tools to solve these issues into one easy app that automates the accrual of non-inventory purchases and correctly recognises purchasing consignment stock upon receipt and the subsequent sale.

Handling these issues is often time-consuming and prone to delayed processing. The automated purchase accruals eliminate the need to manually accrue these entries at the month's end and allow you to have an up-to-date income statement reflecting all expenses as they happen. Whilst the handling of consignment inventory holdings and sales will enable you to have an up-to-date balance sheet reflecting your liabilities on the inventory only when sold or consumed.

Purchase Accruals

Business Value

Many organisations receive services and products that do not relate to inventory throughout an accounting period. The standard Microsoft Dynamics 365 Business Central functionality only handles expected cost posting for items of type Inventory. As a result, these expenses are not visible until the purchase invoice gets raised. The purchase accruals extension closes this gap and supports the accrual of all types of purchases.

Feature Details

The Purchase Accruals extension can accrue the following types of purchases:

  • All non-inventory line types, including G/L Account, Resource, Charge Item, and Item (where the Type is Service or Non-Inventory).
  • The expected cost posting for Items valued at standard cost is enhanced to accrue for purchase variances (variances between Standard Cost and the expected cost). We added this feature because Business Central posts the expected cost at the item's standard cost when the costing method is Standard.
  • All job-related purchases. The app creates Job Ledger Entries, which also allows you to calculate WIP for received and not invoiced purchases.
  • Sub-contracting purchases
  • Purchase Return Shipments when the return orders are shipped, but you have not yet received a purchase credit memo.

The app adheres to the established principle in Business Central that inventory gets valued at invoiced cost. As such, when the purchase receipt gets invoiced, the accrual is reversed on the invoice date, and then the standard Business Central invoice posting handles the invoice. The app will reverse accruals if you undo a receipt/return shipment.

Other features include:

  • The ability to specify the posting date when you undo a purchase receipt/return shipment.
  • The ability to optionally specify interim accounts instead of expensing the purchases at the time of receipt. This feature allows you only to recognise expenses when you get invoiced but still accurately reflect your current liabilities.

Consignment Inventory

Business Value

Organisations holding consignment inventory often need to do much manual processing to track what consignment inventory gets used to report usage to their vendors accurately. Some vendors also require that consignment inventory not used within a certain period is either returned or invoiced. The Consignment Inventory feature automatically accounts for the usage of consignment inventory and allows you to create purchase invoices based on the actual use.

Feature Details

Consignment inventory gets receipted to a consignment location. It is possible to configure multiple consignment locations if required. The consignment inventory gets receipted at the expected cost so that when the consignment inventory gets used, it reflects an accurate cost. The app allows you to configure the posting accounts to enable them to net off each other, thereby having a nil effect on your balance sheet. When the inventory gets used, the app immediately recognises the consignment inventory as received and not invoiced to reflect the liability to your vendor correctly.

See Also