We need to be able to enter a negative number for physical counts. For example some customers require an invoice for large items before they will give payment. We invoice the product before it is physically recieved and end up with a negative quantity on hand.
Or if a customer returns a supposedly defective item, and we have to return it to the vendor, we don't want to immediately issue credit to the customer until we've recieved credit from the vendor. Therefore we need to leave it as a negative quantity on hand.
by: Rich W. | over a year ago | Manufacturing
Comments
It sounds like your procedures are incorrect, not the software. There should be no real reason to physically count a negative number.
I agree that the above mention of invoicing in advance is incorrect - a deposit invoice should be created to request advance payment. However, there is still a need to carry a negative quantity in inventory: when Work Order issues quantities that have not yet been received, a negative quantity must be carried in inventory to balance out the quantity on Work Order or you will be overstating your inventory values.
There is no reason to allow a negative quantity to be allowed for physical count. That is a workflow issue. There are times, however, that entries posting production or sale of item will post before the receipt of goods does, and that is the only acceptable reason for allowing a negative quantity on hand. I highly doubt that negative count entry is SOX Compliant.
SOX does not apply to small business. This is a necessary function for example when an item is returned by a customer that is claimed to be defective, we will not issue credit to the customer until the manufacturer gives us credit, however we must return it in our system against a PO and that makes it negative. If we do a physical count before we get credit from the manufacturer we have to count it as a negative item. Also sometimes we have to do advance invoicing. In the real world of small business, banks require invoices for payment prior to equipment shipping.
I have a client for whom this was an important feature. Often their suppliers' invoicing and receipt of goods is too far behind the sales and invoicing.