A walk through the Inventory Setup in Business Central

This is what happens in the video

The Inventory Setup in Business Central controls how the entire inventory functionality behaves. The fields you set here determine how costs are posted, how the average cost is calculated, how warehouse handling time is applied, and which number series new items follow. Understanding each field helps you avoid heavy postings, inconsistent costing, and items ending up in the wrong location.

You decide whether costs post automatically to the general ledger or run through the Post Inventory Cost to G/L batch job. You decide whether expected costs create value entries when you receive goods, before the invoice is posted. You set the Default Costing Method that applies to new items, and you choose whether the average cost is calculated per item or per item, location, and variant. You also control whether negative inventory is allowed, whether locations are mandatory, and which number series apply to items, transfer orders, and warehouse documents.

Automatic Cost Posting and the Post Inventory Cost to G/L batch job

The Automatic Cost Posting field decides what happens when you post. Should the posting automatically go into the cost account, or do you want to handle it later with the Post Inventory Cost to G/L batch job?

Normally you set this field, so that when you post the invoice or purchase order, the related item ledger entry is updated automatically when you post the invoice.

Expected Cost Posting to G/L

Expected Cost Posting to G/L applies when you want to post the expected cost. This happens on a purchase invoice, but also on other kinds of documents.

When you receive a purchase order and there is an expected cost on the purchase line, this setting decides whether the system creates value entries for the quantity you handle. It then adjusts or creates the value entry when you post the invoice. Without the check-mark, the value entries are posted only when you actually invoice the purchase order.

The argument for not setting this check-mark is that expected cost posting can produce heavy postings. It also makes the entries more complex to read afterwards when you look into them.

Automatic Cost Adjustment and the period you post back into

Automatic Cost Adjustment controls how far back the system posts when you run the cost adjustment. Do you want the system to post all the way back into the past, or only a day, a week, or a month?

In other words, you decide whether to handle entries regardless of their age, or only entries within a certain period.

Default Costing Method and Average Cost Calculation Type

The Default Costing Method applies when you create new items. It is set on the item card.

The Average Cost Calculation Type can be set per item in general, so that only the item determines the cost. It can also be set per item, per location, per variant, which means the cost follows the SKU card. With that setting you distinguish between the cost on different locations or variants.

Average Cost Period

The Average Cost Period determines the period used to calculate the average cost. If you have very old open entries, this setting decides whether to include them when calculating the average cost, and which period to look back to.

Copy Comments to Shipment and Receipt for Transfer Orders

The Copy Comments Order to Shipment and Copy Comments Order to Receipt fields apply to transfer orders. When you post from a transfer order, they control whether the comments are transferred to the posted documents, the receipt and the shipment.

Outbound and Inbound Warehouse Handling Time

The Outbound and Inbound Warehouse Handling Time is the default time used on inbound and outbound documents. You can also set it up on the location card, so you can distinguish per location what the inbound and outbound handling time is. The value in the Inventory Setup is the default.

This is the time the warehouse needs to handle the order. Because of it, the planned receipt or shipment date differs from the expected receipt or shipment date. The warehouse gets a slack of time to handle the item when it is not immediately available.

Prevent Negative Inventory

If you check-mark Prevent Negative Inventory, you cannot post with negative inventory. By default this field is not checked, which means you can sell an item that results in negative inventory and put the item on inventory later. You do not need the item in inventory before posting it.

This does not apply to the production functionality. Production orders always require the item to be in inventory, so they always use Prevent Negative Inventory.

Creating new items from Sales Orders

When you enter an item on a sales order and the item does not exist, the system suggests creating a new item number. If you do not want these suggestions, you can check-mark the relevant field so the system does not create new items from sales orders.

Copy Item Description to Entries

With Copy Item Description to Entries, you can have the item description transferred into the entries when you post.

Location Mandatory

Location Mandatory is worth checking if you use locations, because you should not post anything in a blank location. If you do not check this field, it is possible to post both with location codes and without. If you use locations, the recommendation is to check this one.

Item Group Dimension Code

Item Group Dimension Code is a dimension you select from the dimension list, used for statistics or analytics on your items. You can have this default dimension, and it applies to the analytics functionality in Business Central.

Default number series for items and warehouse documents

At the end of the Inventory Setup you have all the default number series. When you create new items, these fields look into the number series setup. If the number series do not come with your system, you provide them here.

You set which number series applies to new items, new catalog items, transfer orders, shipments, inventory put-aways, and so on. You can change all of them here.

Q&A