Your Company Needs More Than LIFO and FIFO Inventory Valuation. Dynamics GP Delivers with Perpetual Average Cost!

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The time has come for you to implement an inventory solution.    So far, you have made many decisions… designing your item number scheme, the item class, the unit of measure schedule, the price list for your customers.  These are all very important for not only your reporting, but also for determining how customers can interact with your items.  But, there is one fundamental choice we have left out.  Do you know what it is?

That’s right; you have to choose an inventory valuation method.  As I’m sure you are probably aware, the typical methods are either LIFO Perpetual or FIFO Perpetual and their valuation is pretty self-explanatory.  Each new PO receipt creates a new cost layer for that item and that cost layer is used when that item has movement either within the company via transfers or out of the company via sales.

There is one other method that you may not have yet considered, Perpetual Average Cost.  This method allows the value of your on hand inventory to be adjusted based upon current prices to create an average cost. It requires calculations with each new PO goods receipt. Any pricing adjustments made during the PO matching process from AP either increase or decrease the value of all on hand inventory of that item.  This essentially creates one large cost layer.  Perpetual Average Cost may be the best way to value your company’s inventory in today’s market, but many accounting systems do not offer Perpetual Average cost as an inventory valuation option.

Does yours?  If not, are you looking for a new accounting system that does?

Microsoft Dynamics GP handles this and all of your other inventory needs with ease.  Few accounting/ERP systems offer as wide a variety of features as Dynamics GP.

If you’d like to know more about Dynamics GP and its included functionality, please visit our website.

Have questions about how it calculates inventory values or whether Microsoft Dynamics GP is a good fit for your business, please contact us at Intelligent Technologies Inc.  Our GP experts are ready to team up with you and help your company reach its full potential.

By: Aaron McDaniel, Intelligent Technologies, Inc., a South Carolina Microsoft Dynamics GP reseller.

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