Receive goods after invoice posting in Dynamics AX – Myth or Reality?
Published On: September 26, 2017Categories: Technical
Standard AX application supports purchase order processing in a way that goods need to be received before the invoice can be posted against the purchase order. However, it is not possible to process the documents in the opposite way e.g. to post invoice first and then post the product receipt afterward. The second scenario is getting quite common lately so there is a real need for such an option. There are different workarounds that accountants use to overcome this problem. But, every approach has downsides which make the problem even more complex when a big part of the trading is done this way.
To overcome this limitation, we designed a solution that complies with the standard AX processes and rules. Standard purchase order processing flow requires the stock to be received in order to process and invoice. The general idea is to keep the same process and declare the received stock as “virtual stock”. This is achieved with an additional operation that redirects the stock to a different warehouse so-called “virtual warehouse”. This virtual warehouse stores the stock that is not yet received but the invoice is already booked against the purchase order. This way the received goods will be physically available but in a separate warehouse that is treated in a different way. At the same time, a transfer journal is created from the virtual warehouse to the initial warehouse defined on the purchase order. The following diagram shows the high-level process:
The steps in orange are the additionally developed operations that execute automatically. The transfer journal lines reserve the stock received on the purchase order as a safety mechanism to ensure that it is impossible to move the stock from the virtual warehouse. With this customization, we keep the accounting process the same. The only additional step is the one in green as this step marks the product receipt as a virtual. The steps in blue remain as standard for invoice and product receipt processing.
The purchase order processing has an impact on other processes like warehouse management, general ledger, and master planning. The following section describes the impact on each process.
The warehouse receiving procedure is usually executed using the “Arrival overview” form. This form shows all the expected arrivals including the arrivals originating from transfer journals. As we automatically generate transfer journals the expected arrival will appear on the screen. The process remains the same as arrival journals can be created and processed.
As the standard purchase order process remains in place the stock value is going to be booked on the main accounts specified in the inventory module. Just in the same way as standard product receipt and purchase invoice is booked. The virtual warehouse concept allows the accounting department to use the “Inventory value” report in order to determine the value of the “virtual stock”. The results of the report can be used to transfer value to different accounts if required for any reason.
The master planning uses the warehouse stock as well as the orders to calculate the planned purchase orders. The stock in the virtual warehouse should be considered on the real receiving date and not as a physical stock before that date. In order to achieve this, the virtual warehouse should be excluded from the MRP calculation. Since the real warehouses are included in the calculation the transfer journal will be considered with the receipt date. This is a standard configuration of the system and requires no customization.
In the case when there is a quality control enabled for the items received in the virtual warehouse the automatic quality order creation need to be skipped. Since items are not physically present it makes no sense to block these items. The quality control is postponed for the later stage when the warehouse workers receive against the transfer document.
Does it really work?
This is not just a design or an idea. It is a solution that was implemented at European customer that has intensive trade with vendors from Asia. The goods they purchase travel more than 2 months before they receive while they get the invoice at the time of loading. The solution allows all departments to continue with their routines with no process changes and simplifies the accounting activities around these kinds of orders. Thus, it provides a better overview of the stock quantities and value as well as reduces the errors/differences caused by any workaround solution.