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NAV 2013R2 - Costing

  • 1.  NAV 2013R2 - Costing

    TOP CONTRIBUTOR
    Posted Jul 17, 2019 09:59 AM

    We are a distributor, and we are having issues with our costing.  We use Special Purchase Prices from our vendors that are associated with specific end users.  I know we can use the Purchasing Code to tie a particular Sales order to a Purchase order, but here is the dilemma.

    Let's say we have part ABC.  We buy it at $5 for our OEM.  We have safety stock of 25 on hand for this customer.  We also sell this part directly from out Web site.  Our cost from the vendor for anyone other than Customer ABC is $10 per unit.

    So now let's say we currently have 25 on hand, all purchased at the SP of $5.  We have 50 on a purchase order at our regular cost of $10 per unit.  We receive a sales order from our Website for a Qty of 5 and the customer wants them ASAP.  We have the parts physically on hand, but per NAV they are designated to our OEM. 

    Is there any way we can "easily" take 5 that were purchased at $5, adjust the cost to $10 and ship out to our web customer?  Then when we receive the 50 on order at $10, I would need to put 5 back at a cost of $5 for our OEM, and have 45 in stock with a cost of $10.

    We pay commission on GP so it is very important to make sure the actual costs are associated with a particular sale.  However, we also want to provide the best service possible to our customers.  If we have stock on our shelves, we want to be able to ship it to our customers.  When we have items purchased at different costs it becomes difficult.

    We currently use Weighted Cost for our inventory valuation. 

    I'm hoping someone has similar issues and has found a way to make NAV work for them.  ANY suggestions would be greatly appreciated.  We are scratching our heads trying to figure this one out.

    Thanks,



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    Amy Becker
    Marshall Wolf Automation
    Algonquin IL
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  • 2.  RE: NAV 2013R2 - Costing

    TOP CONTRIBUTOR
    Posted Jul 18, 2019 09:00 AM
    This is an interesting situation.  I would argue that you having inventory SHOULD impact commissions.  As an organization you are incurring carrying costs for the inventory and the customer has a better experience because your company is paying to store the parts for quick fulfillment.  it would be interesting to know the trend of how many come from stock and how many come from that special PO.

    That being said, let's talk about your situation.  What are you using to calculate commissions?  Is it a report that is used to create the payable to the salesperson?  Also, how many salespeople and how many transactions are we talking about here?  If you are very conscientious the commission calculation could be interrupted to look at sale price versus a value in a custom table.  This is a customization that should only impact the commissions calculation so the rest of your financial system will remain intact.

    Another option would be to create a routine that is triggered by posting of the sales order.  The routine looks at the customer and items sold, then runs a routine that makes an adjusting entry to the cost and puts it into a variance account (this is critical to keep your system in balance).  Then this would calculate your GP based on the adjusted cost.  This one is tricky because you will have to be sure that everything balances or your financials will be inaccurate.  This circles back to my first point.  This entry will come directly off of the bottom line so the business is subsidizing the GP and offsetting it with the variance account.  Not ideal in my humble opinion, but I don't know everything about your business.

    Please post what you implement.  This one will teach quite a few of us.

    Good luck!

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    Jason Nicolaou
    Engagement Manager
    Sikich, LLP
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  • 3.  RE: NAV 2013R2 - Costing

    Posted Jul 18, 2019 10:46 AM
    Hello Amy -
    Just wanted to chime in here and say that I do agree with Jason on the potential issues that could arise for revaluing your costs for that sake of commissions.  This could be addressed in the commissions reporting without changing your costs.  Revaluing your costs will impact your true profit and could lead to a complicated and inaccurate profit analysis, which could negatively impact your overall business.  It also will require more diligence from accounting to monitor these situations and chase this thread of updated costs/profit.

    I vote for maintaining the true picture of costs and profit, as Jason suggests, and let the commission report calculate off a "special price" for that customer/item.

    Cheers!

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    Colleen Boak
    Industry Solutions Architect
    Columbus
    Napa CA
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  • 4.  RE: NAV 2013R2 - Costing

    TOP CONTRIBUTOR
    Posted Jul 18, 2019 12:48 PM
    Thanks for your responses.  I am in the process of creating a Jet report.  I'll do some testing and see if this will take care of what I need.

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    Amy Becker
    Marshall Wolf Automation
    Algonquin IL
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  • 5.  RE: NAV 2013R2 - Costing

    TOP CONTRIBUTOR
    Posted Jul 18, 2019 01:44 PM
    One old school thought is to have two items so you can  separate the costs. Using item substitution would help you easily substitute one for the other.  Seems to be the biggest issue is when you need to replenish one pulled out at a lower cost.  Very interesting issue you have....

    Have you tried using lots or variants? I'm not sure they would solve the problem of replenishment.

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    Kim Dallefeld
    Kim@Dallefeld.com
    Dallefeld Consulting, LLC
    Member of Dynamics Consulting Group
    Ft. Worth, TX
    2019 NAVUG Board of Advisors
    Past NAVUG Board Chairman
    NAVUG Programming Committee
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  • 6.  RE: NAV 2013R2 - Costing

    TOP CONTRIBUTOR
    Posted Jul 19, 2019 07:02 AM
    We did a custom commission cost for a plastics distributor, rather than adjusting cost. Adjusting accounting cost is fraught with issues. Adjusting a commission cost has no financial impact other than commission cost.



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