The Last Cost field in Inventory Maintenance is updated with the PO cost at the time a receipt of goods is performed. However, it is not updated when the receipt of invoice is performed. So if the PO price was incorrect, the Last Cost field continues to reflect the incorrect PO price. Since Last Cost is used by the system in multiple areas, including being used as the default cost in PO Entry for certain valuation methods, not having the Last Cost updated with the actual price paid can cause continual price variances. This field is also heavily relied upon by sales and purchasing staff as a quick reference for current cost, so it is important that it is updated with the most accurate cost known by the system.
by: Jeff L. | over a year ago | Sales & Distribution
Comments
I completely agree with this
Not only the last cost, but the FIFO and Average cost in inventory should be updated, and if the item has already been issued/sold by the time of receipt of invoice, the COGS in inventory and GL should also be updated.
It would also be very helpful if they made this change to also put an indicator on the screen of the source of the current last cost (was it from manufacturing, receiving, or invoicing?)
To base the Last Cost on the Receipt of Goods without an invoice in hand is a best case only until the Receipt of Invoice is later posted, which should generate another update of the Last Cost. To leave this step undone creates inaccurate Last Costs - the price you actually paid on the Invoice is the actual true Last Cost - not the price that was entered on the PO. At the time of updating both a Receipt of Goods and a Receipt of Invoice, a Last Cost Update report should be generated to notify the user what changes, if any, will be made to the Last Costs in Inventory before they are made. Also a warning should be generated when the Receipt of Invoice doesn't match the earlier posted Receipt of Goods, so the user will be aware of the variance before the Variance report is generated. The warning window could also give the user the option to adjust the previously posted Receipt of Goods price and/or quantity, by simply checking a box "Update Quantities on Posted Receipt" and/or "Update Unit Costs on Posted Receipt", similar to adjusting a posted AP invoice, instead of posting a variance. The warning window could also give the user another option to adjust the Quantities and Costs on the PO, instead of leaving a bunch of uncompleted PO's. I have seen many customers that don't take the time to resolve old open PO's or clean up the "Purchases Clearing Report." You know what I'm talking about. :-)
Kathy's points are right-on. This change NEEDS to be made.
It's important for the RECEIVING funtion to get the Quantities updated ASAP, they can't wait for a "vetted" vendor invoice to process receiving (the only way I know to get the correct cost into the inventory system). We deal w/ a great number of machined parts such that the price isn't a fixed catalog price. Often we won't have any idea what the final cost will be until it is invoiced.
I would like to see this as well. We have problems the PO price staying wrong for extended periods since the person receiving goods doesn't see the invoice. The Last Cost and the price on the next PO should pull from Receipt of Invoice not Receipt of Goods.
Yes please.
It would also be nice to be able to designate either the STD cost or the Last cost for the default when entering a new PO.
I think last cost should only be used for informational purposes and should never be used as pricing for an item on a new PO. There are fields for setting pricing on an item like standard cost field or setting pricing by vendor. I agree that the last cost field should be set by the cost from the receipt of invoice not the receipt of goods (as this is the true last cost). You would think the software would be capable of adjusting everything related to that wrong receipt of goods cost. Fix COGS on any inventory left for that receipt, Adjust the wrong COGS for any customer invoiced before the invoiced was received. Currently you need to do a transaction entry to fix the COGS tied to the items still in inventory so future customer invoices will have the correct COGS, but any customer invoices done prior will all show the wrong COGS in the history file unless you go into history records and change it.
vendor last cost should be updated at receipt of invoice not receipt of PO. Vendors do not always send updated cost and only to find out the new cost when invoice is received. By then the PO is already received and updated with the wrong vendor last cost. Only to have it go onto the PO wrong the next time.
SAGE- please fix this.
AGREED!!! I constantly have to explain to clients WHY the incorrect cost is showing as the "last" cost!! Some even go as far as to "return" the goods, change the PO price and re-receive!! HOWEVER, this DOES NOT work if the inventory is turned very quickly and you are using lot/serial valuation methods!
Sage please fix this. Our margin reporting for dropship items is useless at the moment, this functionality could be a great work around for us and other dropship users.
It might be best to track both a last received cost field and a last invoiced cost field. Then provide a configuration option as to which field to use for default PO cost, negative tier cost, etc.