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Inventory Closing in AX 2009 - Part II

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Five Steps to Complete Your Microsoft Dynamics AX Inventory Close for 2009, and Prepare for 2010:

1. Prepare to run the inventory close:
Before you perform the inventory close, the following tasks are recommended:  --Make sure that the inventory model assigned to the item on the Inventory model tab of the Inventory model groups form is accurate. Inventory close will settle transactions to each other based on the current inventory valuation method assigned to the item. --View or print the Open quantity report by clicking Inventory management > Periodic > Closing and adjustment > Close procedure > 1. Check open quantities. This report will print a list of inventory transactions that will remain open after the inventory close is performed. For example, you have an item that includes the following transactions:
  • Inventory physical receipt for a quantity of 10
  • Inventory financial issue for a quantity of 3
In this case, the report will show an open quantity of 3, since this financial issue cannot be settled to any transactions. The Open quantity report also includes a Show receipts option that lets you view all the physical receipts posted for an item and all the open quantities that will remain after an inventory close for the date specified. --Print or view the Investigation of cost price for receipts report by clicking Inventory management > Periodic > Closing and adjustment > 2. Check cost prices. This report allows you to enter a maximum deviation percentage. Items that appear on this report will be only those exceeding  the maximum deviation percentage. The deviation is based on the item cost price, item or median cost price, or median. 2. Complete the inventory close :Inventory close will settle issue transactions to receipt transactions based on the inventory model you have selected in the item's inventory model group setup. You also have to choose the general ledger updated to reflect the adjustments created. To close the inventory: --Inventory management > Periodic > Closing and adjustment > Close procedure> CloseTo open the Close inventory form. --In the Close inventory up to field, type or select the end date up to which you want to close inventory. --Select the Run recalculation after closing check box if you want to run a recalculation up to the current date after the closing has completed. --Set any other options you want to choose for this inventory close. --Click OK. After inventory close has completed, the results will be reported in the Closing and adjustment form. Steps that are performed by the Inventory Close routine: When you run the Close routine, Microsoft Dynamics AX performs the following steps: --Checks whether any Recalculations were run after the date that you choose for your Close. Microsoft Dynamics AX will cancel any of those later Recalculations before the Close can start. --Puts all the items that are to be processed into a queue. These items are stored in the InventCostListtable.
Note:  While a Close or Recalculation is processing, you can click Calculation/Calculation List from the Close & adjustment form to view the data in the InventCostList table. This shows which items are still to be processed by the Close or Recalculation process. --Process each item from that queue sequentially. Microsoft Dynamics AX performs the following for each item:
  • Settles individual receipts and issues against one another for the item according to the Inventory Model Group such as FIFO, Weighted Average.
  • Makes any required cost adjustments to the issue that was settled based on the cost of the receipt(s) against which the issue was settled.
  • Updates the inventory transactions to show the settlement and cost adjustment data.
  • Writes the settlement data into the Inventory Settlement table. The data will include records that show explicitly which Receipt(s) were settled to each Issue in addition to any cost adjustment that is made to the Issue that is settled.
--As soon as all possible transactions are processed for that item, Microsoft Dynamics AX looks for any transactions that are fully settled, and then updates those transactions to "Closed" --As soon as all the items are processed, the settlement records that were created are read and sorted by General Ledger Account. Then, Microsoft Dynamics AX summarizes all the cost adjustments that were made, and a General Ledger Journal is created and posted. --If you select the Run recalculation after closing check box in the Close dialog box, a Recalculation will be run for all items up to today's date. 3.  Handle the Inventory Recalculation Process :
The recalculation process matches inventory receipts and issues for the transactions that are not financially matched through inventory dimensions in order to determine the real value of the on-hand inventory. To recalculate the inventory, follow these steps: -- Click Inventory management > Periodic > Closing and adjustment > Recalculation to open the Recalculation form. -- If you want to select specific items or item groups to be recalculated, click Select. Your selection displays in the Items field group. --  In the Recalculate inventory up to field, type or select a date up to which you want the inventory to be recalculated. -- Fill in the remaining fields as required. -- Click OK to start the recalculation.
The Inventory Recalculation routine performs a similar job to the Inventory Close routine. However, there are a few differences. When you run the Recalculation routine, Microsoft Dynamics AX performs the following steps: --Checks whether any Recalculations were run after the date that you choose to run your Recalculation up to. Microsoft Dynamics AX will cancel any of those later Recalculations found before your Recalculation routine can start. --Puts all the items that are to be processed into a queue, and then store the queue in the InventCostList table. --Process each item from that queue sequentially. Microsoft Dynamics AX performs the following for each item:
  • Makes a "virtual" settlement between individual receipts and issues for the item according to the Inventory Model Group such as FIFO, Weighted Average. This is a "virtual" settlement because it occurs in the Recalculation's calculations. However, the detailed settlement data that shows the explicit matching of each issue to the various receipts is not stored in the InventSettlement table. The only data that is stored is the cost adjustment that is made to the issue.
  • Makes any required cost adjustments to the issue that was settled based on the cost of the receipt(s) against which the issue was settled.
  • Writes a single settlement record for any cost adjustment that is made for that Issue into the Inventory Settlement table.
--As soon as all the items are processed, the cost adjustment settlement records that were created are read, sorted by General Ledger Account, and summarized and posted in a General Ledger Journal. --Along with recalculation, you can also perform the following functions from the same window:
  • Cancel later Recalculations. This process indicates that any existing recalculations dated after the close inventory up to or recalculate inventory up to date will be automatically cancelled or reversed before you continue with the closing or recalculation.
  • Recalculate inventory up to. The system date will be proposed by default. You can change this date, but only to a date after the latest closing. 
  • You can also pause and resume the recalculation.
4. Distinguish between recalculate and close :
--Inventory recalculation results in adjustments that match inventory receipts to issues. Unlike inventory close, it will not make a settlement and close a transaction. --The same parameter settings are available for inventory recalculation as for inventory close, but inventory recalculation can be performed on a subset of inventory items. Inventory close must be performed on all inventory items. --Since inventory recalculation can be run on a subset of items, and because inventory recalculation will not make an adjustment for less than the throughput amount, it is not as accurate as an inventory close and should not be relied on to replace inventory close.
5. Determine if cancellation required :
The latest closing, recalculation, on-hand or transaction adjustment made can be cancelled. This may be necessary if, for accountancy purposes, you need to make transactions in the inventory in a closed period. The closing is canceled, but it can still be viewed on the overview tab of the closing and adjustment. Only cancellation of the last closing made is allowed. Because closings are in effect up to a particular date, if closings are canceled in periods between two other closings, there would be gaps in the closing. Reverse completed recalculation: In some cases, you may need to reverse a completed inventory recalculation, returning adjustments to the state they held before adjustments were made. Reverse a completed closing: In some cases, you may need to reverse a completed inventory close, returning settlements to the state they held before adjustments were made. When you reverse a completed inventory close, inventory is also reopened to allow for posting in the valid period. Leveraging the inventory close process to your ongoing advantage: -- Going forward in 2010, run inventory closes on a monthly basis in order to make the Fiscal year process simple on the year end. -- Try to record inventory data sequentially i.e. Receipts followed by issues date-wise -- Inventory close is the first step in the fiscal year close process, so try to do it ASAP -- You can still record transactions for the next year even if annual inventory close has not been run.
-- Finally, and perhaps most obviously, year-end inventory values should be accurate.







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