How a Multi-Country Oil & Gas and Marine Services Provider Corrected Receipt Costs Before Inventory Closing in Dynamics 365 Finance & Operations
Summary
Inventory closing in Dynamics 365 Finance & Operations settles issues against receipts. If a receipt carries the wrong cost, closing pushes that error into cost of goods sold and closing stock value.
The client is a multi-country oil & gas and marine services provider, serving exploration and production operators from offices across the Middle East and Asia. They run Dynamics 365 Finance & Supply Chain Management for accounting, procurement, project management and inventory, with Power BI on top for reporting. During a month-end support engagement we found one receipt valued at a fraction of an identical earlier receipt. We corrected it through a transaction adjustment, recalculated the item, checked ageing and only then ran closing. The fix itself takes minutes. The order of the steps is what matters.
Table of Contents
1. Business Challenges
We found two receipts of the same item, at the same site and warehouse, for the same quantity of 5. Their values were far apart.
| Receipt | Quantity | Posted value | Value per unit |
|---|---|---|---|
| Receipt 1 | 5 | 23,050.15 | 4,610.03 |
| Receipt 2 | 5 | 1,375.00 | 275.00 |
Same item, same site and warehouse, same quantity.
If we had run closing on these values, two things would have happened.
- Every issue settled against the second receipt would have been settled at too low a cost, understating cost of goods sold.
- Inventory value at month-end would have been understated.
2. Solution Overview
Closing uses the cost on each receipt to settle and adjust issues. When we correct the receipt first and then recalculate, D365 re-costs the dependent issues for us.
Correcting after closing is more work. It means reversing the close or posting further adjustments in a later period.
Correct the cost, recalculate the item, check ageing, then close.
3. Approach & Methodology
1. Correct the item cost through a transaction adjustment
Go to Inventory management > Periodic tasks > Closing and adjustment.
- Open a transaction adjustment. On the action pane, select Adjustment > Transactions. An adjustment voucher opens, dated the month-end.
- Choose the transactions. Select Select to choose the transactions to adjust.
- Filter by item. In the query, enter the item number in Criteria against the Item number field. Add other ranges such as financial date if needed, then select OK.
- Enter the correct unit cost. The item’s open receipts load with posted quantity and posted value. Select Adjustment > Item cost price and enter the correct unit cost. The Adjustment column shows the change per line.
- Post. Select Post.
- Recalculate the item. Run an item-wise Recalculation from Closing and adjustment, dated the month-end, so dependent issues pick up the corrected cost.
| Receipt | Posted qty | Posted value | Item cost price | Adjustment |
|---|---|---|---|---|
| Receipt 1 | 5 | 23,050.15 | 4,610.03 | No change |
| Receipt 2 | 5 | 1,375.00 | 4,610.03 | +21,675.15 |
2. Check inventory ageing
Review the inventory ageing report as on the month-end date. Confirm the corrected values flow through.
| Item | Qty on hand | 0–30 days | 31–60 days | 61–90 days | Total value |
|---|---|---|---|---|---|
| Item (same item) | 10 | 46,100.30 | 0.00 | 0.00 | 46,100.30 |
3. Run inventory closing
In Closing and adjustment, select Close procedure > Close, set the month-end date and run it. Confirm the new closing line shows OK, and review the log if it has warnings.
| Closing | Closing date | Run type | Status |
|---|---|---|---|
| Prior period | Previous month-end | Closing | Closed |
| Month-end close | Month-end | Closing | Closed OK |
4. Impact
Correct after closing
- Issues settled at too low a cost flow into cost of goods sold
- Month-end inventory value is understated
- Fix needs a close reversal or later-period adjustments
Correct before closing
- Receipt cost fixed through a transaction adjustment
- Recalculation re-costs dependent issues automatically
- Closing runs on correct receipt values
Practical takeaway
- Make a receipt-cost check part of your pre-closing routine.
- Look for receipts of the same item whose value per unit is far out of line with earlier receipts.
- Correct them through a transaction adjustment, recalculate, then close.
5. FAQs
1. Why not just correct the cost after closing?
Because closing has already settled issues against the wrong receipt cost. Fixing it afterwards means either reversing the close or posting further adjustments in a later period. Both take far more work than a check before you close.
2. What does recalculation do that closing does not?
Recalculation re-costs the dependent issues using the corrected receipt cost without finalising the period, so you can confirm the numbers look right. Closing then settles those costs permanently. Running recalculation first lets you verify before you commit.
3. How do I spot a receipt with the wrong cost?
Compare the value per unit across receipts of the same item at the same site and warehouse. Look for a figure that is far out of line with earlier receipts. In this case, 275.00 against 4,610.03 was the flag to investigate before closing.
4. Does the transaction adjustment affect the general ledger?
Yes. Posting the transaction adjustment creates inventory revaluation entries, and recalculation and closing carry the corrected cost through to cost of goods sold. Fixing it before close keeps both inventory value and COGS accurate from the start.
5. Does this apply to every costing method?
The correct-then-recalculate approach fits the inventory models that rely on closing to settle cost, such as weighted average and FIFO/LIFO. Always confirm the item’s inventory model group first, since standard-cost items handle revaluation differently.
Conclusion
Closing settles issues against the receipt costs it finds, so a wrong receipt cost becomes a wrong result. One under-valued receipt was enough to misstate both cost of goods sold and closing stock for this client. The check takes minutes and saves a reversal later.
Is your month-end close taking longer than it should?
CloudFronts helps finance and supply chain teams on Dynamics 365 Finance & Operations get inventory costing and closing right. Talk to our team about a closing health check.
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