The periodic process that adjusts costs associated with transactions according to the method used. These values are estimates until transactions are fully settled, where “value open” = ‘No’, and the period in which that occurred has been closed. 

*Value Open

The term to describe when an inventory receipt transaction has no remaining quantities to be settled against inventory  issues. This value can be seen on the InventTrans table.

The periodic process that settles inventory receipts (increase to inventory quantity) to inventory issues (decrease to inventory). Once completed, no additional value adjustments may be made for the period. 

How to run:

Inventory management > Periodic tasks > Closing and adjustment

Select Recalculation

When Inventory Recalculation is Required

Not all methods require recalculation and close. That doesn’t mean you shouldn’t run them! To keep information up to date, you should run recalculation as often as needed to maintain confidence in your financials and run inventory close with regularity. 

Methods that require inventory recalculation:

• FIFO

• LIFO

• LIFO Date

• Weighted Average

• Weighted Average Date

Several points to consider when determining how frequently inventory recalculation should be run:

1. 1. How frequently should recalculation/close be performed?

How frequently do you want to see adjustments from the costing method to hit the GL? If you want to see more real-time updates of inventory value, run recalculation more frequently.

1. 2. How often does quantity of an item go to zero?

The frequency that your inventory results in a Net 0 quantity at the end of a day, combined with the frequency of inventory recalculation/closing, can be helpful in determining what method is best for your company. If your inventory goes to 0 mid-month but you only recalculate at close, depending on the inventory method, your values could be very different.

1. 3. Overall Impact

At the end of the period, inventory value for a given method is the same, regardless of the frequency of the inventory recalculation. The question becomes do you want your inventory value updated each day or at the end of the month in relation to GL balances?

Clients who don’t recalculate regularly may see dramatic variations in GL balances throughout the month depending on the costing method and procurement price fluctuations. 

How to run:

Inventory management > Periodic tasks > Closing and adjustment

Select Close procedure then Close Inventory

When Close Is Required

If you want to use the inventory archiving feature, inventory close is required. Inventory close prevents any value changes from occurring in prior periods. 

Methods that require inventory close:

• FIFO

• LIFO

• LIFO Date

• Weighted Average

• Weighted Average Date

Best Practice

Microsoft recommendation is to run inventory close at least once per fiscal period, regardless of the inventory method you are using.