Dear ERP Support Team,
I hope you are doing well.
We have recently started a new product and created new PRC Code for this particular product like for Component, Packing, Semi-Finish Product and we are experiencing an issue in the accounting entry flow within the ERP. Below is the expected posting sequence:
Correct Entry Should Be:
Export Sales – Video Laryngoscope – Dr
AVS Video Laryngoscope – Dr
Trade Debtors (Foreign) – Cr
Additionally, the part cost is also being affected in Step 3. The correct part cost is 3.79, but the system is picking up 1.79, which further impacts the cost of sale accuracy.
Due to these incorrect mappings:
• Raw Material inventory is going negative, and
• Finished Product inventory is becoming overstated.
We have attached the relevant snapshots for your reference.
Kindly review the mapping and correct this posting flow at your earliest convenience. Please let me know if any further details are required.
Regards,
Rana Muneeb
Accounts Receivable - 1013201 (Trade Debtors) = (DEBIT) 5.00 PKR
Revenue - 4012105 (Export Sales) = (CREDIT) 5.00 PKR
That is a GAAP standard accounting post for an invoice/shipment of product (see any google search as to what accounts normally get credited/debited on such a transaction).
The same goes for the credit/debits postings of the inventory and cost of goods sold. When an item ships, inventory is backflush (decreased) so that’s a credit, and the debit goes to cogs/expenses just as you have it mapped in your Cetec system.
Inventory - 1012105 (Raw Material (B/S) - Video Lyrangoscope) = (CREDIT) 1.79 PKR
COGS/Expense - 5011118 (Raw Material (P/L) - Video Lyrangoscope) = (DEBIT) 1.79 PKR
This mapping is also supported by any search of generally accepted accounting principles for debits/credits to cogs and inventory when shipping/invoicing a product to a customer, and it aligns with what I’m seeing in your admin >> g/l mapping and PRC specific GL mapping.
I hope this helps clarify.
Furthermore, you took a screenshot above of a part record showing 3.79 PKR as the part cost. However, you’re looking at the wrong part. The part you’re looking at is “AVFGS-VL-S1“.
The part you should be looking at is “AVCVL-M-30“ - which does indeed have a 1.79 PKR cost (see here - Cetec ERP )
You can see on the job cost (details/serials) report of the invoice you mentioned above (whose G/L posting you were worried about) - Cetec ERP
Notice how it displays that the workorder consumed part “AVCVL-M-30“ to be used to build the workorder to produce part “AVFGS-VL-S1“. Because your line transaction code was “build”, the idea is that it picks AVCVL-M-30 and then builds and ships part AVFGS-VL-S1 immediately to the customer, bypassing the finished goods stage entirely. This is called a “custom work order”.
There doesn’t appear to be any system issue here as far as we can tell. Please reach out to our sales team (sales@cetecerp.com) if you would look to book any process consulting from our team for further assistance.
Dear @cetecerp ,
Thank you for the detailed explanation and for clarifying the standard G/L behavior under GAAP for invoicing, inventory backflush, and COGS recognition. We agree that:
• Debit to Trade Debtors and credit to Export Sales is GAAP-compliant, and
• Credit to inventory with corresponding debit to COGS upon shipment is also standard accounting treatment.
However, our concern is not with the debit/credit nature of the entries, but rather with the inventory stage being impacted and the process being followed by the system, which is not aligned with our intended operational flow.
Key Clarification on Our Intended Process
Our intended process for this product is:
AVC (Components / Raw Material stage)
AVF (Semi-Finished Product stage)
AVB (Finished Product stage)
Shipment / Invoicing from Finished Goods (AVB)
In this flow, inventory should be relieved from AVB (Finished Goods) at the time of shipment — not directly from Raw Material.
Current System Behavior
As you correctly pointed out, the system is treating this transaction as a Custom Work Order, where:
• Part AVCVL-M-30 (1.79 PKR) is consumed, and
• Part AVFGS-VL-S1 is built and shipped immediately,
• Resulting in bypassing the Finished Goods (AVB) stage entirely.
While this behavior is system-valid, it is not operationally or control-wise aligned with our manufacturing and inventory tracking requirements, because:
• Finished Goods inventory (AVB) is not being recognized,
• Raw Material inventory is being relieved directly at shipment,
• Stock visibility and valuation at AVF/AVB levels become distorted.
Cost Concern (Clarified)
We acknowledge that the system is correctly picking 1.79 PKR for part AVCVL-M-30 under the current configuration.
However, from a business perspective, shipment should occur after capitalization of semi-finished and finished stages, where the final finished cost (3.79 PKR) is expected to reside at AVB before sale.
Request for Guidance
Our request is therefore process-oriented rather than accounting-rule related:
How can we configure CETEC so that:
Finished Goods (AVB) is properly built and held,
Shipment/invoicing relieves AVB inventory instead of Raw Material, and
The transaction does not default to a custom work order flow?
If this requires:
Change in line transaction codes,
Separate build and ship steps,
Or disabling auto-build-and-ship behavior for this PRC,
Kindly guide us on the recommended setup.
We appreciate your support and look forward to your guidance on aligning the system configuration with our intended manufacturing and inventory control process.
Best regards,
