Inventory dual valuation / dual currency in Dynamics 365 SCM

In this blog post, I would like to inform you of an upcoming exiting change in the inventory valuation functionality of Microsoft Dynamics 365 Supply Chain Management.
The new options are announced in the new Dynamics 365: 2020 release wave 1 plan.

Update: The original plans from Microsoft changed and the features got postponed. The features are now part of the release plan for 2021 wave 1; with another title:

Global Inventory Accounting Add-in for Dynamics 365 Supply Chain Management – Dynamics 365 Release Plan | Microsoft Docs

Dual valuation

There are many organizations who are required to report inventory using an actual valuation. Accounting standards like IFRS/IAS, but also local authorities (GAAP) do require to use costing principles as FIFO, LIFO or average. However, the use of standard costing is preferred by the business users for management reports.

Until now, there is no support for using one costing valuation across the business and another one for statutory reporting and tax purposes. The requirement is common. In the Fixed Assets, there are features to support multiple value models (e.g. economic and fiscal depreciation models).

As there was no support, in some cases, the company had chosen to use an actual method like FIFO. However, this requires inventory closing and recalculation. This is in fact not an issue, but it is too hard to understand and check the cost adjustments this procedure creates. When you use FIFO, LIFO or average costing in Microsoft Dynamics, the system will use an intermediate average cost price and corrections will be posted afterwards to align with the chosen costing option. Looking at the adjustments, many users got lost.

In some other cases, the customer did use the standard costing and had to make manual adjustments at the end of a reporting period to align with an accepted actual costing principle.

So, without doubt, adding the support for multiple valuation models in Dynamics 365 Supply Chain Management is a good move.

Dual currency

Personally, I do think this is a great move from Microsoft to support the option for dual valuation and dual currency. There were quite some customers around the world who requires these features. At least, I got the question many times and also had seen the question several times on the Dynamics community forums. Until now, there was only support for managing the inventory value in the accounting currency. With the announcement to support multiple valuations, there is now also an option to use multiple currencies next to the accounting currency.

This feature will help companies who need the feature as part of their operations or reporting requirement. To be able to meet IFRS/IAS accounting standards, enterprise organizations should be able to report the inventory value for their subsidiaries in a stable currency.

How it will be implemented exactly is not clear to me yet. I do hope, there will be currency revaluation options which might be similar to the accounts payable and receivable currency revaluation options. These features have been described as costing topic: Multiple inventory asset representations.

When is it coming?

According to the Dynamics 365: 2020 release wave 1 plan, we might expect the preview for dual valuation / dual currency in May 2020 and a general availability a few months later in July. However, due to testing, feedback or other priorities, the release plan might change. So, if you are interested in a certain feature, always check the latest information available in the release plan and check out the change history. Until today, I have not noticed a change in any feature.

There is more

If you haven’t checked the release plan, I would encourage you to read the content. There are really many new, cool features announced for both Dynamics 365 and the Power Platform. With an amazing speed, Microsoft is adding new useful features and they are bringing the different applications and technologies together to be able to more smooth work with the different applications of the Dynamics 365 suite of products.

I do hope you liked this post and will add value for you in your daily work as a professional. If you have related questions or feedback, don’t hesitate to use the Comment feature below.


That’s all for now. Till next time!