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How to Use “Item Type” for Non-Stock Items

ArcherPoint How-To Blog: Step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV

One of the least known features in NAV is the “Type” field on the item card. This is a new field that provides some functionality that did not previously exist in NAV. Most of us aren’t aware of this field because you don’t see it on the item card page. You can identify an item as a “Service” item in the Type field. A “Service” item can be purchased and sold, but can’t be used in any other “Inventory Reference” such as production orders, or Item Journals.

Some of the interesting features of a SERVICE item are:

  • Item ledger entries are created, but they do not carry an inventory value.
  • You can see the quantity of that item on hand.
  • You can Purchase a Service Item
  • You can ship a Service Item on a Sales Order.

Some things you can’t do with a SERVICE item.

  • Produce via a production order.
  • Consume on a production order.
  • Use on an Item Journal
  • Perform physical inventory counts.

Let’s take a look at where you might want to use items that are identified as SERVICE.

Purchasing a Resource

Many of you are using a modification to be able to purchase a “Service”. Using service items now provides you with a tool to setup an item and purchase that service repetitively without having to reference a G/L account on a purchase order. In the past this required a modification to the purchasing system so that you could reference a “Resource”. Now, with “Service” items, you don’t need to utilize this modification. You can set the item up, identify it as TYPE = Service, and enter an item number on the PO to purchase your non-stock items.

Broker Type Sales

If you operate as a broker, you never technically take possession of the goods. Depending on how the accounting transaction is required, you could set your item up as a Service Item. In this approach, you would never show an inventory transaction for the item. You would need to manage your posting groups to control how you recorded the purchase cost and revenue generated.

Freight Costs

Many times drop ship orders dealing with freight on both the sales and purchase order. You can use a “Service Item” to include the freight on the sales order, which will pass the freight line to the purchase order. This eliminates many headaches in previous versions of NAV where the freight line had to be dealt with manually as a G/L Account line.

Things You Should Know

  • The ILE holds the “Cost” information in the Non-Inventor Cost field.
  • You can’t use Service items to track supplies as you can’t deduct inventory from an item journal or Production Order.
  • The purchase transaction posts to the “Purchases” G/L Account, so you will need to manage the posting group setup so that it does not flow through your “Inventory” Purchases G/L account. There is no offsetting transaction to clear it from the purchases account as is done with an Inventory transaction.
  • Selling a “Service” item shows revenue, but does not have an offsetting COGS entry (since it was not an inventory cost). You will need to manage your Revenue and Purchases G/L account activity to make sure your sales and expenses make sense.

If you have any questions regarding this process or have similar questions regarding importing and exporting in any version of NAV, please contact ArcherPoint.

Read more "How To" blogs from ArcherPoint for practical advice on using Microsoft Dynamics NAV.

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