Is Revalue Inventory Standard Cost Really 100% Complete?

Let’s say your company uses standard costing to help identify possible issues with item costs.  You are the account administrator and you have completed all of the steps required to use the standard costing feature in NetSuite.  First you enabled standard costing, then you created cost categories, configured item records, defined cost versions, setup standard costs, and finally, revalued your standard cost inventory.  Everything is good to go right?  You are ready to conquer the world and eliminate any concern your company may have about item cost!  Not so fast.  The revalue inventory standard cost status says it is 100% complete, but is it?  Let’s take a closer look.

The other day I made a site visit to one of my NetSuite clients who uses standard costing on their inventory items. When I arrived, they were quick to tell me something was seriously wrong with their standard cost inventory.  According to my client, when they were fulfilling their sales orders, not only was the standard cost not posting to the general ledger, nothing was posting at all.  This was the GL Impact screen from one of their Item Fulfillment records: 

At first, I thought that they had possibly missed a step when revaluing the inventory earlier in the day.  So, I had them walk me through the process they followed to revalue their standard cost inventory from start to finish.  Once they had walked me through, I realized they had done everything correctly and the revalue inventory status page showed 100% complete.  The standard cost should be posting to the general ledger as expected, however, it was not.  Something else had to be happening that was not allowing for the standard cost to post.

Since the revaluation was done correctly, the next step was to check to see if the inventory cost calculation was still running.  The only way to do this in NetSuite is to look at the title of the Inventory Valuation Summary report (or a similar report with inventory values), as there is no status page for inventory cost calculation.  To check the report, follow these steps:

1. Navigate to: Reports -> Inventory/Items -> Inventory Valuation
2. Click the wrench in the bottom right corner and check the box for Display Title
3. The title will now display. If an inventory costing calculation is still in progress, this will show on the title of the report.

That was it!  The standard cost was not posting on Item Fulfillment record due to the inventory costing calculation still running.  Once this was determined, my client had two questions: How long will inventory costing calculation take to complete?  And what exactly is being calculated?  Here were my responses.

How long will the inventory costing calculation take to complete?

This is the part that is unclear.  According to NetSuite, there is no guideline for the amount of time this could take.  Depending on the amount of calculations taking place, the process can take anywhere from a few minutes to several hours.

What is being calculated?

Since this was a standard cost revaluation, all the items with inventory on hand that were selected during the revalue of standard cost inventory had to have the total inventory value recalculated.  This ended up taking several hours for the 1,500+ items that were selected during my client’s revaluation.

Once the inventory costing calculation completed, my client was able to continue use of standard costing on their items as usual.

Before you leave, I would like to share a few other changes to inventory items and/or transactions that could trigger an inventory calculation in your NetSuite account.  These calculations can occur regardless of the costing method used.  An inventory calculation may occur when a change is made to one of the following on the item record or a transaction:

• The item
• The item quantity
• The unit price
• The serial or lot number
• The date
• The order total
• The taxes charged

If you are ever noticing an issue with your item costing regardless of the method you use on your account, your first step should be to check whether or not the inventory costing calculations are still in progress.

RSM is the #1 solution provider of ERP and CRM systems for the middle market. RSM helps companies evaluate, select and implement the best ERP solutions available and was recently recognized as the 2016 worldwide solution provider of the year by NetSuite. To contact RSM, you can reach out via email at erp@rsmus.com or by phone at 855.437.7202 .

By: Greg Cole – Pennsylvania NetSuite Solution Provider

Greg Cole